Health care spending is projected to increase by just 4.5 percent in 2014, fueled primarily by changes in the industry intended to bring down costs, according to a new report from PricewaterhouseCoopers’ Health Research Institute.
Analysts predicted a medical cost of 6.5 percent next year; however, changes in health insurance requirements will effectively lower that figure by two percentage points. In addition, some of the slowdown can be contributed to the lingering effects from the 2007 economic recession, such as delaying or avoiding medical consultation or elective procedures.
Analysts pointed to several other changes which are slowing costs:
- The growing number of retail clinics that were used by consumers, 24 percent in 2012 compared with only 10 percent in 2007.
- The growth of employers’ use of high-performance networks, which employers contract with marquee health systems to offer high-quality care at savings of 10 percent to 25 percent;
- A rapid adoption of high-deductible health plans; and
- Federal readmission penalties.
The report also outlined factors that could hamper efforts to curb costs:
- The FDA’s approval of a greater number of specialty drugs than traditional ones between 2010 and 2012.
- The potential for industry consolidation which inflates prices by as much as 20%; and
- The potential for accountable care organizations to fail in curbing costs, particularly since few people are enrolled in such networks and start-up costs can exceed savings in the short-term.