KeepHealthCare.ORG – Employers’ medical costs stabilize… for now
PwC’s Health Research Institute projects a 6 percent medical cost trend in 2019, consistent with the 5.5 percent to 7 percent range of the previous five years. (Photo: Shutterstock)
After employers and other stakeholders spent several years successfully slowing medical cost increases to single digits, the trend of rising costs for employers has stabilized – but that’s not good enough, as medical costs continue to grow as a percent of total employee compensation, according to PwC’s report, “Medical cost trend-Behind the numbers 2019.”
PwC’s Health Research Institute projects a 6 percent medical cost trend in 2019, consistent with the 5.5 percent to 7 percent range of the previous five years. Costs will likely rise as consumers access health care in more convenient ways, increasing utilization; more doctors become employees of health systems that charge higher prices than independent doctors; and likely higher prices due to the consolidation of the health care market from the recent megamergers such as CVS Health-Aetna and Cigna Corp.-Express Scripts Holding Co.
Related: Employees’ health care spending up, usage down
Three factors are tempering the forecasted spending increases for next year:
More engaging health care service offerings that provide higher quality and lower-cost care
A flu season that will be closer to average, compared to the severity of this year’s season
While the medical cost trend is stabilizing, average employee costs continue to escalate as their health and performance aren’t improving, according to the report. Indeed, average labor productivity growth of 1.1 percent over the last 10 years is far below the 2.3 percent average of the last seven decades.
“Efforts by employers to cut utilization have mostly run their course,” the authors write. “Employers and consumers are plagued by high prices that continue to grow because of new, expensive medical services and drugs, and other factors, such as consolidation.”
Addressing prices will require employers and insurers to collaborate with employees, providers, pharmaceutical companies, pharmacy benefit managers, community health resources, retail pharmacies and new entrants to the industry.
“It will mean sharpening focus on three areas: justifying the price of products or services by demonstrating their value, getting comfortable working with third parties advocating on patients’ behalf, and targeting investments that improve the customer experience,” the authors write.