Top drivers of costs in 2010

While legislative mandates aimed at adding covered services to benefit plans or adding cumbersome reporting requirements will drive costs for insurers, there are other drivers to consider. Medical technology is certain to inject new costs for the system overall, says Marianne Udow-Phillips, director of the Center for Healthcare Research & Transformation at the University of Michigan.

The former director of the Michigan Department of Human Services and executive at Blue Cross Blue Shield of Michigan, she says medical technology encompasses new procedures, pharmaceuticals and medical devices.

Unlike in most industries, where new technology lowers costs, healthcare innovations often lead to more expense, Udow-Phillips says. New devices and approaches can lead to more diagnostics as well. Offering healthcare coverage to the previously uninsured and underinsured also will increase demand for costlier services.

One way to control costs, she says, is to implement comparative effectiveness research and direct resources toward devices, drugs and treatments that are most effective. Those findings could guide healthcare decisions and reduce spending.

The Agency for Healthcare Quality & Research is in the process of doling out $300 million in federal stimulus funds to support comparative effectiveness research with the caveat that research should be directed toward discovery of comparative clinical quality, not costs. The cost/value proposition will undoubtedly be weighed separately by private payers and used for coverage decisions.

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