Why You’ll Spend More on Health Care Next Year
Americans are set to spend more on health care next year as the economy improves and fewer people are likely to put off seeking medical treatment.
A new report by PricewaterhouseCooper (PwC) estimates health care spending will rise by 6.8 percent next year, an increase from this year’s estimate of 6.5 percent. The study measures spending growth on the cost of services and the amount of services used in the employer-based health care market. Inpatient and professional services are expected to account for the largest amount of private health insurance spending in 2015.
Related: Obamacare Boosted Health Care Spending and GDP
PwC noted that consumer health spending dropped in the last five years after the recession, but as the economy bounces back, more people are feeling financially confident to seek medical attention and stop delaying treatments.
“At first glance, the health sector appears to be reverting to historical patterns of bouncing back as the nation recovers from the economic doldrums,” the report said. “Whether spending more freely because of the improved economy or shopping with insurance provided through the Affordable Care Act, consumers triggered the first bump in growth in the first quarter of 2014. We expect that to continue through next year.”
The researchers also attributed the uptick in spending to a combination of expanded coverage under the Affordable Care Act and a surge in expensive drug prices.
Indeed, PvC said the U.S. is expected to spend 192.2 billion on specialty drugs in 2016 –a 121 percent increase from 2012. That’s on pace to quadruple by 2020.
Related: Recession Keeps Health Care Spending in Check
The study also said that hospitals are having to spend more to upgrade technology and digitize their health records—sometimes passing costs along to consumers.
But there are also some factors helping to reduce the cost of healthcare to consumers—like comparative price shopping for health care services.
“The prevalence of high-deductible health plans is spawning a new class of healthcare shoppers: price sensitive and willing to consider that less may be more. Families in high-deductible health plans use fewer brand name drugs, pursue lower-cost care venues such as retail clinics and visit doctors less frequently,” the report said.
Also, a growing number of insurers are using risk-based payment systems, which give providers bonuses for treating patients effectively, and penalize them if mistakes result in higher costs.
“A stronger economy and millions of newly insured Americans mean an uptick in spending growth for healthcare organizations. That may be a welcome respite from recent years of budgetary pressure,” says the report. “But the fact that health spending continues to outpace GDP underscores the need for a renewed focus on productivity, efficiency, and, ultimately, delivering better value for purchasers.”
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