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Is Healthcare Spending Beginning to Stabilize?

Sunday, September 2, 2012
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While healthcare spending for employers should grow at a historically low rate in 2013, it continues to escalate at double-digit levels around the globe in 2012.

At least that's according to dueling reports released by PricewaterhouseCoopers and Towers Watson, respectively.

In the annual Behind the Numbers report on medical-cost trend, published by the New York-based Health Research Institute of PwC US, researchers predict healthcare spending in the United States will grow at a "historically low" rate of 7.5 percent in 2013.

Medical inflation has been lower than expected for the past three years, the report says, and recalibration of previous estimates shows a low range of 7 percent to 7.5 percent from 2010 through 2013. The report names four factors that should "deflate" the medical-cost trend in 2013: market pressure to reduce medical supply and equipment costs; increased popularity of new methods to deliver primary care; increased availability of comparative cost information; and accelerated savings from the pharmaceutical-patent cliff.

"Slower growth in healthcare costs could be the 'new normal,' " says Michael Thompson, a principal of human resource services at PwC.

But, according to another report, The 2012 Towers Watson Global Medical Trends Survey released by the New York-based consultancy, the cost of providing employee medical benefits "continues to escalate at double-digit levels around the globe" in 2012. The three most-cited factors in the survey, based on responses from 237 leading medical insurers in 48 countries, are new medical technology causing overuse of care (52 percent), practitioners pushing too many services (50 percent) and providers' profit motives (31 percent).

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Helen Darling, president of the Washington-based National Business Group on Health, says her recommendation to HR leaders is a simple one: "Keep the pressure on to control healthcare-cost increases, increase consumerism and individual accountability, use all of the tools and resources available to empower consumers to be wiser purchasers and support them to choose healthier lifestyles... ."

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