How Reform and Industry Trends Are Affecting Employer Healthcare Costs

With key provisions of the Patient Protection and Affordable Care Act (PPACA) now in effect for over a year, Truven Health Analytics has assembled data tracking how reform and other industry trends have affected employer healthcare costs. Researchers used claims data from 340 large U.S. employers representing 18.3 million covered lives. They tracked healthcare costs over the past five years and project costs for 2012 and 2013.

Medical and pharmacy costs for employees and their dependents increased 4.6% from 2010 to 2011, which is the smallest increase in annual employer healthcare costs over the past five years. The research also projects that allowed amounts will continue to grow at a moderate rate of 4% to 5% in 2012 and 2013. The relatively modest 2011 cost trend of 4.6% reflects the impact of PPACA and Mental Health Parity regulations that became effective in 2011. The following is an overview of the findings:

• Extension of Dependent Coverage: The extension of dependent coverage through age 26 for unmarried children accounted for 1.4% of the overall increase in health care costs and 4.6% of the employers’ increase in health care costs. The lower-than-average health care costs for individuals 19 to 26 beginning coverage in 2011 reduced average per member costs by 0.2%.
• Preventive Services Coverage: The PPACA requirement to cover more preventive services has resulted in a 3.8% increase in physician’s office visits for preventive care. This modest increase may reflect the generous preventive coverage offered by many large employers prior to PPACA.
• Mental Health Parity Regulations:†Roughly 0.4% of the 4.6% 2011 healthcare cost trend was driven by a 13.7% increase in Mental Health and Substance Abuse services due to the Mental Health Parity and Addiction Equity Act of 2008.

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Last Updated 06/29/2022

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