Report: Health care costs to rise 9% in 2010

INDIANAPOLIS -- Employers who offer health insurance coverage could see a 9% cost increase next year, and their workers may face an even bigger hit, according to a report Thursday from consulting firm PricewaterhouseCoopers.

Costs will rise in part because workers worried about losing their jobs are using their health care more while they still have it, the firm said in the report released to the Associated Press. The report also said rising unemployment is driving up medical costs.

Health care reform legislation currently being hashed out in Congress likely will have little impact on next year's costs, said PWC Principal Michael Thompson. But he noted that the intense focus on health care may slow price increases.

"Nobody wants to be front page news when all the lights are shinning on your industry," he said.

The report projects the expected cost increase per person for employee benefits plans, and it factors in things such as price increases, as well as utilization changes.

Businesses confronted with increases will likely pass some of the burden to employees via higher premiums, deductibles or copays, Thompson said.

"If the underlying costs go up by 9%, employees' costs actually go up by double digits," he said, noting that will have a "major, major impact" when many employers also are freezing or cutting pay.

A total of 42% of employers surveyed said they would increase employees' share of costs.

The 9% increase predicted for 2010, however, represents a slight decrease from the 9.2% PWC projected for this year, and 9.9% predicted for 2008. A growing use of generic drugs has helped tame spending, according to the most recent survey.

Actual cost increases for this year and last were not available.

PWC surveyed more than 500 employers and health insurers. One of the factors it found that may increase medical costs next year is the lingering threat of unemployment. Workers worried about losing their health coverage along with their jobs tend to seek medical care they might otherwise put off.