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Health care cost growth for large employers in the U.S. is projected to slow to 6.5 percent in 2014, down from 7.5 percent in 2013, according to consultancy PricewaterhouseCoopers (PwC) Health Research Institute's annual report, Medical Cost Trend: Behind the Numbers. This projection is based on an analysis of medical costs in the large-employer market, which covers about 150 million Americans.
The medical cost trend (or growth rate) reflects changes in the actual cost to treat patients. The trend is a key ingredient in setting insurance premiums. After accounting for likely changes in benefit design, such as higher deductibles and other cost-shifting measures, the report projects a net increase in large-employer health care outlays of 4.5 percent next year.
Uncertainty about the impact of health care reform implementation and what to expect from a largely unknown, newly insured population is making it difficult to predict future costs, particularly in the individual market, the study found. At the same time, structural changes within the health care industry are helping to contain costs and deliver care more efficiently.
Employees, who are paying a greater share of the costs, are also making spending adjustments that are helping to restrain cost increases. Many are delaying care, using fewer services and choosing less expensive options, such as retail clinics and urgent-care centers, according to the report.
The findings are based on interviews conducted in March and April 2013 with 10 health plan officials whose companies cover a combined 95 million people, as well as on data from a 2013 PwC survey of 1,047 employers from more than 35 industries. The researchers also examined government data sources, journal articles and conference proceedings to determine the medical cost trend.
In response to the rising costs, businesses are shifting more of the financial burden to workers, reducing retiree benefits and pursuing more aggressive strategies to promote measureable health outcomes, the report found. Companies still describe health insurance as a valuable tool for recruitment and retention, and tax advantages are expected to keep employer coverage at high levels in 2014.
Steps employers are taking to better control costs include:
In 2013 the average individual in-network deduction in employer-provided plans was $1,230 (up from $680 in 2009), and the average individual out-of-network deductible was $2,110 (up from $1,000 in 2009)."As high-deductible plans become more of the norm, employers should ensure that employees understand their benefits and responsibilities. Studies have shown that some people in high-deductible plans forgo preventive care that is fully covered by the plan," the report states.
In 2013 the average individual in-network deduction in employer-provided plans was $1,230 (up from $680 in 2009), and the average individual out-of-network deductible was $2,110 (up from $1,000 in 2009).
"As high-deductible plans become more of the norm, employers should ensure that employees understand their benefits and responsibilities. Studies have shown that some people in high-deductible plans forgo preventive care that is fully covered by the plan," the report states.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
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