Healthcare spending in the US is expected to increase by double digits in 2007, according to PricewaterhouseCoopers. The medical cost trend projections are used by insurance carriers and employers to set health insurance premiums levels and design benefit packages offered in 2008. Early estimates reflect widespread optimism that health spending can be curbed if consumers share more of the costs. The purpose of this report is two-fold; first, to report our estimates of the 2007 medical cost trend, and second, to reflect how various inflators and deflators affect these trends.
According to PwC research, insurance carriers anticipate medical costs to rise across all plan designs, including health maintenance organizations (HMOs), preferred provider organizations (PPOs), and consumer directed health plans. But the rate of increase will be slowest among consumer-directed health plans, in which members have higher deductibles and pay more of the direct costs of their care up-front. 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.
