The U.S. medical inflation rate is expected to dip to 6.5 percent in 2016, sealing off a 10-year trend of slowing employer medical cost growth in the employer-sponsored market, according to PwC's Health Research Institute's report "Medical Cost Trend: Behind the Numbers."
HRI identified three principal factors that expected to lower the healthcare spending rate in 2016.
1. The Patient Protection and Affordable Care Act's "Cadillac tax" on high-priced plans is accelerating the shift of costs from employers to employees.
2. Increased adoption of telemedicine, which could offer more efficient and convenient care opportunities than traditional medical care.
3. New health advisers guiding customers toward more efficient healthcare.
Medical inflation still outpaces the rate of general inflation, despite the year-over-year slowdown, according to the report. This is largely due to the introduction of new expensive specialty drugs into the market, which is expected to continue driving healthcare spending upward, as well as an increase of major cybersecurity breaches. Hospitals and health systems face a greater need to substantially increase investments into guarding personal health data, which adds to the overall cost of delivering care.
"While the health industry has improved in efficiency over the past decade, the slowing employer medical cost growth is due to the increased role of savvy health consumers facing higher cost-sharing responsibilities and more complex decisions," said Kelly Barnes, PwC’s U.S. health industries leader. "This will continue to impact the new health economy in the coming years."