Study: health inflation still slowing

U.S. health care spending will increase 7.5 percent next year, according to estimates by PricewaterhouseCoopers L.L.P.’s Health Research Institute, a slower rate of growth reflecting a sluggish economy and efforts to contain costs by providers, employers and families.

Historically, health care spending bounces back up as the economy recovers, PwC stated, but a fourth year of relatively low growth suggests that the gap between health care spending and overall inflation may be narrowing to a more sustainable level.

“Slower growth in health care costs could be the new normal,” said Michael Thompson, a PwC principal who covers human resources services, in a written statement. “We”™re seeing long-term trends that could keep cost increases in check. As employers shift expenses to their employees, for example, these workers are pursuing lower-cost alternatives. Even as the economy strengthens, changes in behavior by employers and consumers may help limit medical growth.”

October is the start of the traditional insurance renewal season that runs through the end of the year. For U.S. employers, the net impact of next year’s increase could be as low as 5.5 percent, PwC found, after accounting for changes in benefit design by purchasers.

Companies are focused on two primary strategies to control medical costs in 2013:  increasing employees’ share of costs, and expanding wellness programs, according to a PwC survey of 1,400 employers in 34 industries.  Among other changes, health plans are pushing through increases in in-network deductibles, and co-payments for emergency room treatments and prescription drugs.

Other PwC findings include:

Ӣ nearly six in 10 employers are considering increasing employee contributions to health plans,

Ӣ half of employers are considering increasing cost-sharing through plan design, such as higher deductibles,

Ӣ more than half of employers are considering raising employee prescription drug plan costs,

Ӣ average enrollment in high deductible plans coupled with a health reimbursement account has increased to 43 percent in 2012, from 34 percent in 2010, and

Ӣ nearly three in four employers offer wellness programs, and half of those say they are considering expanding those programs next year.