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Changes to Insurance Cost under Healthcare Reform

Posted by Tamara

Group health insurance premiums are expected to rise 9% in 2011, compared to 11-20% for small employers in 2010, according to a report recently released by PricewaterhouseCoopers or PWC.

More employers are eliminating co-pays for visits to a doctor’s office and charging workers a percentage of the doctor’s fees. Instead of paying $25 for an office visit, an employee may pay 20% of the doctor’s fee, whether that is $75 or $225. This tactic, called co-insurance, encourages employees to skip office visits for minor illnesses like a cold. Co-insurance allows all employees to save money on their monthly premiums, while those who use healthcare the most end up paying the most.

Many employers are also requiring that employees pay a percentage of the cost for brand-name prescription drugs while generics are still low-cost or even free. This combined with widespread $4 and $5 prescriptions for generics at discount stores, will reduced the cost of drugs for some patients. More drugs will be available as generics, too. By 2011, prescription medications that currently generate $26 billion in revenue will become generic. This includes the best-selling drug in the world, the cholesterol-lowering drug Lipitor.

Generic drugs already account for 80% of prescriptions under some plans, and that trend is expected to continue, according to the PWC study reported by the Society for Human Resource Management or SHRM.  

For the first time in 2011, most employees will have deductibles of $400 or more. Many employers will offer high-deductable plans that permit an employee to pay less for insurance coverage with a deductable of $1,500 - $2,500.

PWC suggests that hospitals may try to negotiate higher prices to compensate for lost revenue from Medicare. With more doctors and hospitals consolidating, employers may see short-term cost increases, although there will be cost savings over the long term.

Hospitals are expected to spend billions on EHR or electronic health records. This program has already received money under the federal stimulus plan for 2011. By 2015, Medicare providers who do not have EHR will face penalties.




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