No Surprise: Health-Care Cost Growth To Spike Again In 2015
Health-care costs will grow even faster next year after a brief and apparently transient slowdown during the recession, according to a new report from PricewaterhouseCoopers.
PwC expects medical costs to increase by 6.8 percent in 2015, slightly higher than their projection of 6.5 percent in 2014. Health-care costs have been rising for years — but the medical industry took a hit in the recession as more cost-conscious patients put off seeking health care, and the growth of health-care spending slowed slightly in recent years.
The Obama administration has repeatedly attempted to appropriate the slower rise of health-care costs and attribute it to Obamacare reforms — claims that many protested, pointing to the recession’s impact on health-care spending instead. The new growth rate spikes indicate that the health-care law’s reforms have not led to any sustained change in costs.
The economic upswing, growing costs of specialty drugs, a large shift of physicians to hospitals from private practices, and investments in information technology have all contributed to rising health-care costs, according to PwC. Those who put off health care during harder economic times are expected to begin to seek care again over the next several years.
Growing costs of specialty drugs is “sparking anxiety,” according to the report — PwC predicts that specialty drug spending will quadruple to over $400 billion by 2020. The health-care industry isn’t sure whether the costly drugs will end up saving money in the long-term by lowering future medical costs.
With health-care costs rising more sharply again, insurers are likely to make even more changes to health coverage to rein in their own costs. Customers should expect hiked deductible and other out-of-pocket costs while provider networks are simultaneously narrowed. (RELATED: Narrow Insurance Networks Will Spread To The Whole Country, Expert Warns)
Employers are “desperate for ways to hold down these cost,” said Ceci Connolly, managing director of PwC’s Health Research Institute. “We’re seeing the rise in high-deductible plans as the current strategy.”
While overall costs are rising, PwC noted that high-deductible plans will prevent price sensitive customers from using more costly health care services, somewhat deflating the rising overall costs.
“Families in high-deductible health plans use fewer brand name drugs, pursue lower-cost care venues such as retail clinics and visit doctors less frequently,” the report concluded. (RELATED: Survey: Employers Fear Growing Obamacare Costs, Increasingly Shifting Hikes To Workers)