'Marketplace' Report: Health-Care Costs Go Up A new industry report says employer health-care costs are poised to rise almost 10 percent in 2008 — more than double the annual inflation rate. Nancy Marshall Genzer points to a hospital building boom for the cost increase. And she expects the increase will result in a premium hike for employees.
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'Marketplace' Report: Health-Care Costs Go Up

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'Marketplace' Report: Health-Care Costs Go Up

'Marketplace' Report: Health-Care Costs Go Up

'Marketplace' Report: Health-Care Costs Go Up

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A new industry report says employer health-care costs are poised to rise almost 10 percent in 2008 — more than double the annual inflation rate. Nancy Marshall Genzer points to a hospital building boom for the cost increase. And she expects the increase will result in a premium hike for employees.

MADELEINE BRAND, host:

From NPR News, it's Day to Day. Health care costs are going up and up and up. A new study by PricewaterhouseCoopers says employers who pay for their employees' health care should expect a 10 percent increase this year. That is more than double inflation. Marketplace's Nancy Marshall-Genzer is here now. Nancy, what's behind this big increase?

NANCY MARSHALL-GENZER: Well, Madeleine, one reason is there's a hospital building boom going on right now. Hospitals are adding private rooms, which everybody wants, and centers for outpatient treatment.

BRAND: Well, why should employers then, who provide health insurance, why should they pay for that?

MARSHALL-GENZER: Well, Madeleine, their employees are actually creating the demand for these new hospital facilities. Hospitals say they're just responding to that demand. Basically, Madeleine, we need to look in the mirror. I asked health care analyst Jerry Katz about this. He says consumers are a big factor behind the increased hospital construction cost.

Mr. JERRY KATZ (Health Care Analyst): Everybody wants a flat screen TV. Everybody wants technology in the room and privacy. So that's, you know, part of the reason why the building boom is going on.

BRAND: So, Nancy, how will employers likely respond? Will they just pass those costs on to their employees?

MARSHALL-GENZER: Between you and me, probably. Jerry Katz says workers can certainly expect their premiums to go up. He thinks some employers are going to stop paying for health insurance altogether. Katz says 25 million Americans are underinsured, that is their insurance doesn't cover all of their health-care expenses. And he expects that number to grow.

Mr. RUDOLPH FRANKEL (Health Care Analyst, IMS Health): And as approximately 80 percent of health care costs are associated with individuals with chronic illnesses, health care costs have no where to go but up.

BRAND: OK.

MARSHALL-GENZER: Now that was actually a different analyst that I talked to. That was Rudolph Frankel of IMS Health. And he did talk about how chronic illnesses are a huge chunk of health care spending. And, Madeleine, if you're curious about how we can limit health care cost, wellness programs are key.

BRAND: All right. Well, thank you, Nancy. That's Nancy Marshall-Genzer of Marketplace. And we'll be hearing more about this on Marketplace, later on.

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