Rising Costs of Healthcare

 
""""Health Insurance Premium Cost Drivers
 
From 2004 to 2005, enrollees saw an 8.8 percent increase in the cost of their insurance premiums
 
 There were several factors that led to the increase in premium costs.  These factors can be separated into three categories:  (1) general inflation, (2) healthcare price increases in excess of inflation; and (3) increases in utilization.
 

 

 
 
Healthcare Price Increase in Excess of Inflation
 
Healthcare price increases in excess of inflation account for 30 percent of the increase in premium costs. Factors driving price increases in healthcare are the movement to broader–access plans, higher–priced technologies and cost-shifting from Medicaid and the uninsured to private payers.
 

Increased Utilization

Increased utilization accounts for 43 percent of the increase in premium costs. Factors driving increase utilization are increased consumer demand, new treatments and more intensive diagnostic testing.  The aging population and lifestyle changes (obesity, smoking, drug abuse, physical inactivity)  also contribute to increased utilization.

 
 
*The Factors Fueling Rising Healthcare Costs 2006, PriceWaterhouseCoopers