Health care cost increases fueled by many factors

The continued impact of specialty drugs is one factor driving health cost increases. Photo: Getty Images.

While health care cost increases have slowed in the U.S., they’re far from flat. The latest National Health Care Trend Survey from Xerox shows health care will cost 7.1 percent more in the coming year; that beats the rate of inflation. In fact, as The Kaiser Family Foundation reported earlier this year, if you look at the numbers since 1999, inflation has risen 43 percent, and employee earnings have gone up 54 percent, but health care premiums have spiked by 121 percent.

There are many factors in play that continue to drive health care costs upward.  Some are policy-based: more federal- and state-mandated coverage of some benefits; cost-shifting by providers because of continued limited reimbursement from Medicare and Medicaid; and some provisions of the Patient Protection and Affordable Care Act that shift more costs to commercial payers. Providers are also under increased regulatory scrutiny, resulting in fee increases to cover higher administration costs.