Ten years after HRI began issuing projections, challenges remain despite improvements in efficiency and quality that have begun to bend the cost curve. Much of the slowing growth can be attributable to cost shifting. Consumers, who consequently bear more decision-making on health services, are looking for greater value. Read the highlights of the report. Read more.
Inflation in the $2.9 trillion US health economy has slowed for over five decades, but medical spending has grown during that period as a share of gross domestic product.
Employers offering high-deductible plans grew three-fold since 2009, and consumers now paying more for their care think twice before going to the doctor.
6.5% projection for next year, based on HRI’s analysis of medical costs for the 150 million Americans in the large employer market, weights the downward push of factors against the upward.
High cost sharing may be a barrier to care. During a recent 12-month period, 28% of consumers said they did not see a doctor because of costs.
From Hepatitis C to new treatments for Psoriasis, the FDA pipeline is funneling through more and more specialty drugs with estimated 2016 sales of $9 billion for the top 7 sellers.
Post-breach costs of $200 per record far outweigh $8 per record preventative costs.
Spending growth in the $2.9 trillion US health economy is expected to slow in 2016 as compared to 2015, but it will still outpace overall economic inflation. Stock prices, earnings reports and the customer base have increased and that means the industry is financially healthy. Affordable healthcare, however, remains out-of-reach for many consumers.
For this research, HRI interviewed industry executives, health policy experts and health plan actuaries whose companies cover more than 100 million employer based members. HRI also analyzed results from PwC’s 2015 Health and Well-being Touchstone survey of more than 1,100 employers from 36 industries and a national consumer survey of more than 1,000 US adults.
In this year’s report, we identified the following factors expected to “deflate,” or reduce, the healthcare growth rate in 2016:
Going the other way, there are two factors expected to” inflate,” or boost, the spending trajectory in 2016:
There are three factors expected to “deflate” or reduce the spending trajectory in 2016 are:
There are two factors expected to” inflate,” or boost, the spending trajectory in 2016:
More Americans with health insurance and an improving economy have not increased the medical spending trajectory. Structural changes have helped keep costs in check. But there is still much to be done as long as health spending continues to outpace gross domestic product and individual consumers and companies struggle to afford services. Health companies must restrain costs when bringing new cures and technology to consumers.
Affordability moves front and center in the New Health Economy. Employers must pursue strategies that not only strengthen their bottom line but better equip workers to make informed health decisions – or they will all pay a high cost in the long run. User-friendly technology offers opportunities for greater transparency, remote care delivery and true comparison shopping.
HRI issues its projection for the coming year’s medical cost trend based on analysis of medical costs in the large employer insurance market. In compiling data for 2016, HRI interviewed industry executives, health policy experts and health plan actuaries whose companies cover more than 100 million employer based members. HRI also analyzed results from PwC’s 2015 Health and Well-being Touchstone survey of more than 1,100 employers from 36 industries and a national consumer survey of more than 1,000 US adults.
Behind the Numbers 2016 is our tenth report in this series.
A historic recession, sluggish recovery, landmark reform law, innovative disruptors and cost-conscious purchasers have provided the crosswinds in a tumultuous decade for the US health sector. Despite the improved growth rate, medical inflation still outpaces general economic inflation. Healthcare providers, insurers and life sciences companies face considerable pressure from consumers and competition from non-traditional new entrants to stay ahead of the game over the next decade.
The year ahead will see spending intensify with the entry of new high-cost specialty drugs into the market. Investments to guard personal health data from major cyber security breaches will also add to the overall cost of delivering care.
But moderating forces are expected to hold growth in check. The ACA’s insurance excise “Cadillac” tax set to begin in 2018 is already influencing employer’s benefit design. More than 85% of employers in PwC’s 2015 Health and Well-being Touchstone survey have implemented, or are considering, greater employee cost sharing.
Although virtual care is not new, its use will ramp up significantly in 2016. Costs will fall as care transitions from capital intensive “brick and mortar” to remote monitoring and visits. New health advisers that can steer consumers to more efficient healthcare are also on the rise.
As cost shifts to employees, affordability moves front and center in the New Health Economy. Employers must pursue strategies that not only strengthen their bottom line, but also better equip workers to make informed health decisions.