We’ve heard it time and time again: Healthcare costs are on the rise. However, a recent study conducted by the Health Research Institute found medical cost trends for employer-sponsored plans aren’t rising at the same pace. In fact, they predict that in 2017 the medical cost trend will be the same as 2016. HRI measured the spending growth for 155 million Americans who are covered by employer-based health insurance and found that the forces inflating medical cost trends are ones you can probably guess: an increased access to care — most notably primary care, behavioral health services and convenient care delivery.
While these factors raise costs, the tactics used by the pharmacy benefit managers to get bulk discounts and lower pricing will help to keep the overall drug cost trends relatively stable for employer-sponsored plans. We’ve all seen the headlines about Mylan and their EpiPen price increase. I’m optimistic that political and public pressure may play a role in ramping down large drug cost increases but of course you can never be completely certain.
After reviewing the findings, I chose one inflator and one deflator that I believe will play a big role in 2017’s medical cost trend for employers:
1. Inflator: Convenient care
The proliferation retail clinics and urgent care center has led to higher utilization by consumers. Because of this increased utilization, convenient care is impacting medical cost trend. According to HRI, there will be more than 3,000 retail health clinics in the U.S. by 2017. Forty percent of consumers will seek care from a retail clinic in 2016; 88% said they are likely to seek treatment at those sites in the future. In addition to retail clinics, there are 9,300 walk-in, stand-alone urgent care centers in the US, and 50–100 new clinics open every year.
Response: A visit to the emergency room can cost up to five times more than a visit to an urgent-care center. Emergency-room treatment for non-emergency medical conditions is a major contributor to the rising cost of healthcare. Additionally, consumers are asking their providers and insurers to provide more convenient, less costly options — especially those managing a chronic condition. There’s now a myriad of options available to consumers who now have the choice to receive treatment outside a traditional hospital setting and enjoy the convenience and quality a site of care facility can offer. Some patients may even be able to receive their medication or care in the comfort of their homes — all at a lower cost. Convenient care delivery is something that will undoubtedly proliferate as technology advances and providers, payors and individuals break from traditional healthcare delivery.
2. Deflator: High-performance networks
Per HRI, 63% of employers offer a high-deductible plan with a health savings account, and 25% offer a high-deductible plan as the only health insurance option to their employees. However, as more and more employees push back against high cost sharing due to high deductibles they’re unable to pay, employers are exploring other ways to control costs. High-performance networks are one of the options that is being seriously pursued.
Response: With healthcare costs in the U.S. continuing to rise, an increasing number of value-conscious employers and consumers alike have made explicit choices about their healthcare coverage. Because of this, the time is ripe for payors to focus on the development of lower-cost, high-performance provider networks. Although these value networks can take a variety of forms, they all give members access to only a limited number of quality-credentialed providers, in return for lower premiums, lower out-of-pocket costs, or both.
As always, the healthcare industry will continue to evolve and we will adapt to ensure our customers and their employees continue to have access to the care they need at an affordable cost.
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