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Island Group Plans is one of New York Metro area’s leading employee benefits firm. We have been providing benefits and client satisfaction to businesses throughout the Greater New York Metro Region for over a decade.


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Health Care Cost Growth Rate Slows

on Tuesday, 14 October 2014.

These four trends are slowing the rate at which health care costs are rising

image001The price of medical services and prescription drugs is increasing slower than before, according to new figures from the U.S. Bureau of Labor Statistics. It's welcome news for benefit brokers and employers after numerous years of watching health insurance premiums skyrocket.

Similar findings appeared in a study published by the journal Health Affairs in September. Specifically, Andrea Sisko and coauthors found total national health care spending in 2013 is predicted to have increased by only 3.6% - the fifth consecutive year that the growth rate was below 4%.

The authors conclude that today's lower rate of growth in health care spending is mainly due to a general economic slowdown. When the country's economic conditions are bad, financial concerns can prevent patients from seeking medical treatment and refilling their medications.

The growth rate for health care prices "has been lower than historical for a few years. We probably will see an increase" as the overall economy gets better, says Jim Whisler, a principal with Deloitte's health actuary practice.

He cites several factors contributing to the recent slowdown in health care price increases:

1) More health care being coordinated and integrated systematically;
2) Analytics that help to identify gaps in care, so the patient receives the care at the right time;
3) New payment models based on the value of the service provided; and
4) A push toward health care consumerism, making prices more transparent to the patient.

"There are a lot of transparency efforts now, and I think awareness is being raised. That will have a long-term effect," says Whisler.

"The long-term trend, given the changes, I think is going to lead to lower trend rates than it would be otherwise. Simple math says the trend rates weren't sustainable as they were," he adds.

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