Flat growth in medical costs in 2009

The growth in medical costs for commercial health plans is expected to level off in 2009 after five years of deceleration. Costs are expected to grow 9.6 percent in 2009, compared to 9.9 percent in 2008.

The factors that have slowed this growth include improved medical management of high-cost patients and generic substitution. New and continued construction of health care facilities and cost-shifting from the uninsured, Medicare, and Medicaid to private payers continue to increase and will account for nearly one in every four dollars spent by private payers in 2009.

Medical loss ratios — the percentage of premiums spent on medical care and treatments — have been relatively stable since 2003. A steady MLR indicates that health plans haven’t seen unexpected changes in medical costs.

These findings are reported in PricewaterhouseCoopers’ Health Research Institute’s “Behind the Numbers: Medical Cost Trends for 2009.” Jeff Fusile, a partner on the health industries team at PricewaterhouseCoopers, says “Medical directors and pharmacy directors have done a good job controlling medical costs through disease management and chronic care improvements.”

Health plans’ medical loss ratio (1998-2009)

Source: PricewaterhouseCoopers. Behind the numbers: Medical cost trends for 2009.

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