Employer cost trend or medical inflation will be at a 6% rate, which is a slight uptick from the previous years, according to a new report.
PwC’s Health Research Institute’s annual report on medical cost trend, Behind the Numbers, found that employers are taking an active role and looking ahead to identify levers to lower costs in the future.
PwC’s HRI conducts this report every year to have a better understanding of what’s driving healthcare cost growth.
“The headline for this report is that employers are taking matters into their own hands. They are becoming what we call ‘employer activists,’” says Ben Isgur, Health Research Institute Leader at PwC. “When we look at what makes up the trend between healthcare utilization and price, utilization has been pretty close to zero over the last five or six years, therefore the majority of what is driving the trend is based on price. Our studies have shown that high-deductible health plans tend to tamp down utilization, but employees are not very satisfied with those high-deductible health plans. In fact, a third of employees don’t have enough money to pay the deductible.”
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As employers take on an activist role, many of their actions will affect providers, according to Isgur. For example, employers are expanding worksite clinics. In 2014, about 27% of large employers had a worksite clinic and now in 2019, that has risen to 38%.
“Providers have an opportunity here to partner directly with employers to provide on-site primary care, helping to keep employees healthy, and managing chronic diseases,” he says.
Employers and payers are also going to be incentivizing people towards lower cost sites of care. “For providers, there is a real opportunity here as well,” Isgur says. “Are you providing the full continuum of care that employers need for their employees?”
As we move forward into 2020, providers need to note that employers will be focusing on chronic disease management, according to Isgur. “An employee with a complex chronic condition costs their company more than eight times that of a healthy employee. Health systems and doctors can provide real value if they can reduce those incidences and help people manage their disease,” he says.
More findings
This year the report found that one-third of consumers with employer-based plans don’t have enough money to pay their deductible.
“This means that employees are put in a situation where they have to decide between seeking out healthcare or paying their rent, car payment, or electric bill,” Isgur says. “This is one of the challenges we have when the cost-sharing that is put on employees actually outpaces their ability to manage their finances.”
For projecting the medical cost trend PwC’s HRI includes a mix of interviews and survey data. HRI interviews health plan actuaries, representing both national plans and regional plans. The team also uses insights from PwC’s Touchstone Survey of more than 500 large employers across the U.S. and their data around what they are seeing in terms of cost trend. To accompanying that, consumers across the US that have employer-based plans are surveyed to see how they are using and reacting to their health and wellness benefits.
Date: July 04, 2019
Source: Managed Healthcare Executive
