HEALTH CARE COSTS: Premium Increase Less Than Expected
Recent predictions of double-digit price increases in health care premiums were undercut yesterday by a study that showed premium increases are barely outpacing inflation. The Journal of Commerce reports that according to analysis from the Hay Group, between 1997 and 1998 health care premiums for 1,000 medium and large business increased 3.5%. Analysts had predicted premiums could increase as much as 5% to 10%, "based on tighter margins and provider pressure for increased revenues." The same-company increase was 2.9% for an individual plan and 4.3% for a family plan. Michael Carter, Hay benefit specialist, said, "Over the past year we found that employers continued to insist on modest cost increases consistent with the Consumer Price Index (CPI) -- and apparently health plans were more willing to accommodate these negotiated rates than the experts had predicted, regardless of the trend factors." The CPI increased 1.7% between 1997 and 1998. The report stated, "The stabilization of medical premium increases around the CPI is quite significant." However, Carter warned that the stable prices may not last, as "increased pressures to improve profit/operating margins will eventually result in increased premium costs (8/17).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.