Litigation, Mandates Contribute to Largest Jump of Health Benefit Costs Since 1990

December 11, 2002

A new report by Mercer Human Resources Consulting shows that the cost of health benefits rose almost 15 percent in 2002 – the largest one-year rise since 1990.

“This is a leadership opportunity for the incoming Congress to reject the political climate that has led to the worst health care cost crisis in a decade,” Karen Ignagni, AAHP president and CEO, said. It is important to understand how the debate of the previous six years – which emphasized new litigation and more mandates and regulation, without addressing diminished market competition and fraudulent billing practices, has placed an unsustainable cost on America’s working families, and the businesses that employ them. Not since 1990 has the cost of providing health benefits risen so high so quickly – and consumers are paying the price.

Ignagni continued, noting, “A recent study by PricewaterhouseCoopers reveals that last year alone, 27 cents of every new dollar of health care spending was driven by litigation, mandates and fraud. These three factors did not add value to the system, but they did add $18 billion in new health care spending, enough to have insured 6.8 million more Americans.

“We urge the next Congress to return to the issues that are important to working families – many of whom are struggling to maintain access to the care they need – by taking steps to improve affordability in the system. The bitter reality is that as consumers continue to pay more for their health care, trial lawyers and other special interests gain the most benefit.”

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