Large employers will see health costs grow in line with recent trends, but there’s a shift in what’s driving spending, according to new data from PwC’s Health Research Institute.
The big surprise is that some of the biggest spending increases are coming from lower-cost basic health care.
“Last year high-cost specialty drugs was the main driver of trends. This year, it’s more utilization that’s driving trends,” said PwC partner Barbara Gniewek.
The growing popularity of urgent care centers and retail clinics is driving more of us to seek care for routine ailments more often, according to PwC’s latest annual spending outlook, Medical Cost Trend: Behind the Numbers 2017.
All those extra visits for ear infections and colds that might have been avoided are starting to add up in volume. While spending on doctor’s office visits has fallen 17 percent over the past 10 years, expenditures for outpatient clinics are up 19 percent.
Retail clinics, mental health vs. specialty drugs
“It’s so convenient. But convenience comes at a cost,” Gniewek said. “Instead of the big deductible being a barrier to care, the convenience is cheap enough to be able to put the money out of your own pocket — especially for young people.”
PwC says employers are seeing similar growth in demand for behavioral health services, since the federal regulations have required that mental health be treated like medical care.
“While employers are betting behind mental health parity, … very often people that have behavioral health issues also have physical health issues,” said Gniewek.
Overall health-care spending is expected to rise 6.5 percent next year, in line with recent trends. While spending for specialty drugs is expected to remain high, at 17 percent of overall health expenditures, growth is expected to be in line with a year ago, with no new blockbuster pharmaceuticals scheduled to hit the market.
More cost-cutting seen in 2017
To help rein in costs for medical care, more large employers are taking a page from Obamacare exchange plans. More than 40 percent of employers surveyed by the consulting firm say they are exploring narrower high-performance network plans for 2017. The employers contract with fewer doctors and hospitals in exchange for better pricing.
Still, PwC researchers say employers remain committed to offering health plans for their workers. Under the Affordable Care Act, states can open up their Obamacare exchanges to large employers starting in 2017, but so far there appears to be little interest on the part of companies or state officials.
“This scenario is more likely several years into the future,” said PwC principal Sandi Hunt. “The first [employers] to enter would be at the highest risk, which would likely lead to higher premiums for small employers.”
Most employers are in the process of putting together 2017 health plans now. Come open enrollment season this fall, workers can expect to see more overall cost-sharing, and perhaps new co-pays on those convenient retail clinic services.