This PwC Health Research Institute (HRI) report looks at the projected increase in the cost of medical services for 2014. Medical cost trend is the primary factor in setting health insurance premiums.
Healthcare spending growth projected to slow in 2014
PwC’s Health Research Institute (HRI) projects that 2014 medical cost trend will be 6.5%—a full percentage point lower than our estimate of 7.5% for 2013. This projection is based on analysis of medical costs in the large employer market, which covers about 150 million Americans. The net growth rate, after accounting for benefit design changes such as higher deductibles, will be about 4.5%.
The tepid economic recovery continues to affect healthcare spending growth. But HRI has identified other important factors contributing to a historic slowdown in 2014.
Each year, HRI issues its projection for the following year's medical cost trend based on activity in the market that serves employer-based insurance. For its 2014 projection, HRI interviewed health plan actuaries and officials (whose companies cover a combined 95 million people), industry executives and health policy experts. HRI also analyzed results from PwC’s 2013 Touchstone Survey of more than 1,000 employers from 35 industries. In this year's report, we identified:
Four factors "deflate" medical cost trend in 2014:
Two factors "inflate" medical cost trend in 2014: