Cost and Use of Services Drive Health Insurance Premium Increases

3/17/2009

Each year, America's Health Insurance Plans (AHIP) asks PricewaterhouseCoopers to take an in-depth look at what is contributing to rising health insurance premiums. In looking at the numbers for 2007, researchers concluded that growth in benefits costs is what is fueling rising premium costs. That's not surprising since such a significant proportion of the health insurance premium dollar is used for benefits. Costs are up; use is up... so premiums are up.

But PricewaterhouseCoopers also dug deeper and examined what is driving increased benefit costs. Researchers classified the drivers in three categories: general inflation (accounting for 46 percent of the increase), health care prices in excess of inflation (contributing to 30 percent of the increase) and increased use of services (contributing to 25 percent of the increase). Unfortunately, we likely can't significantly influence general inflation. But that leaves plenty of opportunity for us to help make premiums more affordable by finding ways to influence cost and use of services. Among the tools we use to manage the cost of services are provider contracting and education and medical policy decisions. We influence use of services in countless ways, among them case management and disease management programs, health coaching, wellness programs, and member education tools like the CareEnhance nurse advice line and myRegence.com.

These activities are essential to good stewardship of our members' premium dollars. Our overarching goal continues to be to ensure that our members get the care they need when they need it. That includes doing all we can to make sure the care they receive is appropriate, affordable and provides value.

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