Lower medical inflation expected in 2013, report finds

NEW YORK — The slow economy, cost cutting and lower use of services by patients looking to save money will combine to cause healthcare spending to grow at a "historically" low rate in 2013, according to a new report released Thursday.

The PricewaterhouseCoopers Health Research Institute found in its annual "Behind the Numbers" report that medical inflation has held at between 7% and 7.5% since 2010. While healthcare spending often has gone back up in economic recoveries, the report found that four years of relatively low growth may be narrowing the gap between healthcare spending and overall inflation to what it called a more sustainable level.

"Slower growth in healthcare costs could be the 'new normal,'" PwC human resource services principal Michael Thompson said. "We're seeing long-term trends that could keep cost increases in check."

According to a survey of 1,400 employers, they are using two primary strategies to contain healthcare costs, including increasing employees' share of costs and expanding health-and-wellness programs. "As employers shift expenses to their employees, for example, these workers are pursuing lower-cost alternatives," Thompson said. "Even as the economy strengthens, changes in behavior by employers and consumers may help limit medical growth."

The report further found that average enrollment in high-deductible plans, coupled with a health reimbursement account, has increased from 34.2% in 2010 to 43.2% in 2012, while nearly three-quarters of employers are offering wellness programs, with half of those saying they plan on expanding them. Half of employers are planning to increase cost sharing through plan design, such as higher deductibles, while more than half are considering raising employee prescription drug plan costs.

PwC also found four factors that would deflate the medical cost trend in 2013, namely market pressure to reduce supply and equipment costs, increased popularity of new methods to deliver primary care, increased availability of comparitive cost information and accelerated savings from the pharmaceutical patent cliff.

"Market forces are driving demands for better outcomes and reasonable costs," PwC U.S. health industries leader Kelly Barnes said. "The question is, how will industry respond? We expect to see health organizations create services and partnerships that engage consumers and improve quality. It isn't just dollars spent, but value derived." 

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