Wall Street Comes to Washington

Publication Date: August 2004

Publisher: Center for Studying Health System Change

Author(s):

Research Area: Health

Type: Brief

Abstract:

While health care cost trends likely will continue slowing through the end of 2004, the longer-term outlook for a sustained slowdown in underlying costs and private health insurance premiums largely depends on the strength of the economy, according to market and health policy experts at the Center for Studying Health System Change’s (HSC) ninth annual Wall Street roundtable. Even as cost growth slows, insurers are practicing pricing discipline to keep premium trends ahead of cost trends to maintain profitability. Employers will continue to shift costs to workers through higher deductibles, copayments and coinsurance, but an improving economy could temper this trend as labor markets tighten. Employers remain skeptical of new health insurance products, including tiered-provider networks and consumer-driven health plans. Although growth in hospital use has slowed, the industry remains in the throes of a building boom. Increased payments to managed care plans could reinvigorate private plan participation in Medicare, but concerns about the federal budget deficit could prompt Congress to roll back rate increases.