Medications, New Treatments, Devices Responsible for Premium Increases in 2001, Study Says

Prescription drugs, medical devices and new medical treatments were "among the biggest contributors" to the double-digit increases in health insurance premiums between 2001 and 2002, according to a study released on April 24 by the American Association of Health Plans. The Atlanta Journal-Constitution reports that the study, conducted by PricewaterhouseCoopers, found that these factors accounted for 22% of the premium increases this year, which averaged 13.7% for large companies. Higher hospital reimbursements accounted for 18% of the increases and government mandates accounted for 15% (Meyers, Atlanta Journal Constitution, 4/25). Litigation, fraud and abuse also contributed significantly to premium increases, the study found. "Runaway lawsuits, a cascade of duplicative and conflicting regulations' and the unintended consequence of 1,500 state and federal mandates make up 27% of the increase in health care costs," AAHP President and CEO Karen Ignagni said. The study found that health plans spent $18 million on these factors in 2001 -- money that could have been used to provide coverage for 6.8 million uninsured individuals, Ignagni said, urging Congress to focus more on the uninsured. The study also estimated that managed care will reduce the cost of private health insurance by $182 billion over the next five years (CongressDaily, 4/24). The study is available online. Note: You will need Adobe Acrobat Reader to view the study.