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New Report Shows Slower Premium Growth, But Increasing Pressure to Address Waste in Health Care System
Date:12/3/2008

health support; provider support; and marketing. Six cents go to costs associated with government payments, regulation and claims processing and other administration. Health insurance plan profits comprise three cents of the premium dollar, unchanged since the last report.

The report found that physician spending accounts for 33 cents of the premium dollar and that it increased by 5.5 percent in 2007. Hospital inpatient spending amounts to 20 cents of the premium dollar and grew at a rate of 7.5 percent.

Fifteen cents of the premium dollar go to outpatient spending, which grew at the rate of 8.2 percent. The report noted that "This rapid and steady growth in outpatient diagnostic testing is in part driven by the practice of defensive medicine."

The study found that prescription drugs account for 14 cents of the premium dollar and that drug spending increased 5.7 percent, compared to the double-digit jumps of recent years. The report suggests that health plans' prescription benefit tools and techniques which have helped slow growth rates "offers lessons about strategies to restrain cost growth without harming quality."

While the report points to lower health care costs, it does raise an important alarm about future health care spending -- wasteful spending that adds no value or quality to the care patients receive. The report highlights the care coordination, chronic disease management, and prevention programs health plans have implemented to combat waste in the health care system. Additionally, it outlines other efforts to reduce waste such as increasing standardization and transparency; improving research on comparative effectiveness of treatments; reforming the medical liability system; promoting value based reimbursement; and enhancing health information technologies.

To view the entire PwC report, visit www.AH
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SOURCE America's Health Insurance Plans
Copyright©2008 PR Newswire.
All rights reserved

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