Medical costs to see double digit gains in 2007
Insurance carriers anticipate medical costs to rise by double-digits across all plan designs, according to PricewaterhouseCoopers, which released reported projections of medical cost trends for 2007. The projections help insurance carriers and employers set health insurance premiums levels and design benefit packages so employers often change their benefit packages to avoid big premium increases.

PwC’s report, "Behind the Numbers: Medical Costs Trends for 2007," says that employers and the government have covered the majority of rising medical costs noting that in 1960, American spent six percent of their personal budgets on medical costs—the same as in 2004.

The rate of increase will be slowest among consumer-directed health plans. In 2007, PPO costs are expected to rise 11.9 percent, HMOs by 11.8 percent and consumer-driven health plans by 10.7 percent, according to the report.

"Medical costs continue to grow faster than wages, and this trend is an important driver of insurance company premiums," said Jack Rodgers, managing director of the Health Policy Economics Group at PricewaterhouseCoopers. "The fact that medical costs are expected to increase by double digits, however, does not mean that health insurance premiums will increase at the same rate. Employers have the ability to influence premiums through strategic and creative benefit plan design. This is a reason that the growth rate of premiums has actually declined each year since 2003 even though medical costs assumed by insurers have accelerated," he added.

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