Employers will spend up to 6% more on healthcare next year, PwC finds

Despite efforts to cut healthcare costs through high deductibles and other cost sharing, private employer medical costs are projected to increase by 6 percent in 2020, according to PwC Health Research Institute's annual medical cost trend survey.

For its "Behind the Numbers" report, the institute conducted 55 interviews with health industry executives, health benefits experts and health plan actuaries. Additionally, it analyzed results from its national consumer survey of 2,500 adults and a 2019 health and well-being touchstone survey of more than 550 employers from 37 industries.

Nine things to know:

1. The rise in healthcare spending is largely due to price increases in medical services and prescription drugs, not utilization, according to the report.

2. High deductibles are likely the reason for a decrease in utilization. "Employees are delaying or forgoing care due to their deductible," the institute's report states.

3. There are three major inflators that will affect the medical cost trend in 2020: drug spending, chronic diseases and employees accessing mental health services.

4. Drug spending will grow at an even faster rate over the next few years as "the impact of generics on spending plateaus, biosimilars continue to see slow uptake and new, costly therapies enter the market," the report states.

5. Spending on specialty medications for cancer and other chronic diseases accounts for 40 percent of overall employer drug spending.

6. Drug spending is expected to grow more than 3 percent next year and will double by 2023.

7. Employers are looking to expand mental health services, which will inflate costs in the short term but will have long-term benefits for the workforce, according to the report.

8. The report found that 62 percent of individuals with employer-sponsored health insurance have a  chronic or complex chronic disease, which also raises costs.

9. Employers and payers are attempting to slow medical spending several ways, including opening work site clinics, nudging patients to lower-cost sites of care and helping employees maximize their benefit packages. To control specialty drug costs, employers hope to boost the use of biosimilars.

Read the full report here.

More articles on healthcare finance: 

Senate committee tackles surprise medical bills: 5 takeaways
CMS, inpatient rehab facilities reach settlement on pending Medicare appeals
Texas hospitals maintain state funding for trauma care

© Copyright ASC COMMUNICATIONS 2021. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.

 

Featured Whitepapers

Featured Webinars