Medical cost trend seen to be stabilizing

PwC’s Health Research Institute is a projecting a 6.5% increase in the medical cost trend for 2017, the same number that was projected for 2016 and a slower growth than the industry has seen in previous years. But healthcare is still outpacing the general economic inflation, according to the report.

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“This is a perfect year for employers to start thinking about the balance of short-term costs and long-term savings and how they can accelerate that in the right direction,” says Benjamin Isgur, the director of PwC’s Health Research Institute. “It’s far more efficient for your employee to go to a retail health center now than an ER later.”

Healthcare organizations’ efforts to increase consumer access have already led to higher utilization rates, with 88% of consumers saying they would seek out treatment at retail clinics, according to the report. The same trend is true for consumers seeking mental health treatment – as it becomes more mainstream and easier to access, the healthcare industry is seeing a steadily increasing rate of utilization. Increased spending due to these two causes of higher utilization will inflate healthcare costs next year, says the report, though it will save money in the long term.

But other factors will bring costs lower next year, predicts HRI. More than 40% of employers surveyed are considering implementing high-performance networks with more limited provider choices and outcomes-based payments.

Employers are also narrowing their pharmacy formularies to one treatment option. HRI’s report predicts that pharmacy benefit managers will use this to negotiate on behalf of plan sponsors for lower prices for drugs. At the same time, no specialty blockbuster prescription drugs are expected to hit the market with high costs next year, which should further reduce spending, says Isgur.

“We still think specialty drug costs are on the rise, but we don’t see it having the same force of magnitude,” Isgur says. “It’s still going up but not nearly at the same rate it was a few years ago.”

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