State of the Industry 2011: Spending Increases

October 1, 2010

Spending on healthcare has been growing faster than the overall economy for the past four decades

The numbers surrounding healthcare spending in the United States are familiar to insurers, but staggering nonetheless. Spending on healthcare has been growing faster than the overall economy for the past four decades.

According to CMS, U.S. healthcare spending rose 4.4% in 2008, which was lower than the 6% growth recorded in 2007.

Now, with federal healthcare reform legislation, those abstract numbers are expected to begin hitting even closer to home.

"Many employers will be forced to purchase stop-loss insurance in order to manage the increased risk of the higher limits," Duncan says. He cites a recent National Business Group on Health survey showing that many employers are reacting to healthcare reform measures by raising contribution levels for employees and dependents.

Duncan also pointed to the Massachusetts market, where the state-based reform, which includes an individual mandate and subsidized coverage, appears to have increased costs, rather than reducing them as intended. Payers and state regulators spent much of the summer butting heads over approving premium increases, with most payer organizations finally settling with the state on revised rates by late August.