NEW YORK - Employer health care costs are poised to increase almost 10 percent in 2008, more than double the annual inflation rate. According to an industry report released; a study predicts that medical costs will increase 9.9 percent in 2008 and an additional 9.6 percent in 2009. "Health care providers, insurers and employers will have to monitor medical costs carefully if we are to avoid a resurgence of the double-digit annual increases seen in the past," said the leader of the Health Research Institute.

The report found two factors driving the increase: A hospital building boom, as hospitals replace facilities and add centers for outpatient treatment and private rooms. An increase in the expenses those with insurance are paying for those without. Cost-shifting from the uninsured, Medicare and Medicaid will account for nearly one in every five dollars spent by private insurers in 2009, according to the study, as the federal government under funds public insurance programs and the number of people with private insurance continues to decrease.

One of the things employers are doing in response is increasing wellness, prevention and disease management programs, which they say not only keeps employees healthy but also increases productivity. The survey was done on more than 500 employers and health plans, with total coverage of more than 11 million people by PriceWaterhouseCoopers.