Medical Costs Steady for Casualty and Health Programs

The forecast for medical costs have stabilized for employers, however it is still more than double the Consumer Price Index says the PwC Health Research Institute in their June report.  With all of the recent employer “wellness” efforts, employee medical costs continue to grow. So, why are costs still increasing?

The annual rate of growth in employer medical costs is forecasted to be 6% for 2019, which is half the rate of growth seen a decade ago, thanks largely to the rise of high-deductible health plans.  The report points to several additional factors influencing this trend.

Factors That Are Increasing Costs

According to the report there are three leading factors that are increasing costs in the system.

1. Care anywhere and everywhere. Employers and health plans are providing convenient ways for employees to obtain care.  While the goal is to decrease spending, by having multiple ways to access care is increasing utilization and costs.
2. Healthcare systems megamergers. With providers merging, less competition will increase prices.
3. Physician consolidation and employment. More doctors are practicing as employees of hospitals, health systems and medical groups. These organizations tend to charge higher prices than independent doctors.

Factors That Are Decreasing Costs

The report points to three leading factors that are decreasing costs in the system.

1. Flu impact. The 2017-18 flu season was the worst in several years, increasing care utilization and driving up medical cost trend. The 2018-19 flu season likely will be closer to average, slightly dampening the disease’s effect on trend in 2019.
2. Care advocacy. Employers and health plans are offering consumers new services that engage and guide the consumer to better quality and lower-cost care.
3. High-performance networks. These limited-provider networks emphasize high-quality care and customer satisfaction alongside cost savings. Some employers are using their buying power to negotiate directly with providers to create this type of network.

The trends toward better quality with lower cost will continue with emphasis on value, advocacy and intervention.  For a full reading of the PwC Health Research Institute report packed with insights and data for employers and employees, please click here >>

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