PwC projects drop in employer medical costs next year

NEW YORK The growth rate for employers’ medical costs is expected to fall somewhat next year, according to a new report by industry research firm PricewaterhouseCoopers.

The firm’s annual “Behind the Numbers” report found that medical costs would increase by 9% in 2011, a decrease of 0.5% from the 2010 growth rate. For the first time, the report said, most American workers would have health insurance deductibles of $400 or more as more employers returned to “indemnity-style” cost-sharing by raising out-of-pocket limits, replacing co-pays with co-insurance and adding high-deductible health plans.

“Health reform delivers only a minor impact on the underlying medical cost trends in 2011 and introduces hundreds of changes in the healthcare system designed to reduce costs and improve efficiencies in the long term,” said Kelly Barnes, PricewaterhouseCoopers U.S. health industries leader. “These changes could bring significant new costs savings opportunities for employers and payers as well as new choices and transparency for workers buying insurance.”

The report noted that generics would help bring down drug costs, with drugs representing about $26 billion in annual sales expected to lose patent protection in 2011, including top seller Lipitor (atorvastatin calcium), Pfizer’s cholesterol-lowering medication.