Private-Sector Health Care Spending To Grow at Slower Rate in 2016
Private-sector health care spending in the U.S. is projected to slow next year, although it likely still will continue to grow more quickly than the rest of the country's economy, according to a new PricewaterhouseCoopers report, The Hill reports.
The report predicted that private-sector health care spending will increase by 6.5% in 2016, down from 6.8% in health care spending growth that was anticipated for 2015. In 2008, private-sector health care spending grew by about 10%.
However, the report projected that health care spending will continue to grow at a higher rate than the overall U.S. economy. According to the report, health care spending currently accounts for 17.4% of the economy.
The report forecasted that the Affordable Care Act's so-called "Cadillac Tax" on costly health plans, as well as increased use of telehealth and new health advisers, will help to drive down spending. According to a PwC survey, 64% of employers think the Cadillac Tax will have a significant effect when it is implemented in 2018.
Further, the report noted that a shift among employers to offer more high-deductible health plans will likely shift more costs to consumers, which could makes individuals more aware of health care expenses and lower spending as a result. The share of employers offering such plans has nearly tripled since 2009, with average deductibles growing by $500. According to the report, such a change could help to lower the growth in overall health care spending to 4.5% in 2016.
Meanwhile, the emergence of high-priced specialty drugs and spending on cybersecurity efforts are expected to increase costs, according to the report.
ACA Effects on Employers
Overall, the report noted that the ACA will have "minimal direct effect" on employers' health care costs. Specifically, the report found that:
- 36% of employers said various reporting and compliance mandates under the ACA have substantially affected them; and
- 4% of employers said they were significantly affected by the ACA's employer mandate penalties.
Ben Isgur, director of PwC's Health Research Institute, lauded the projected spending slowdown as "good news," adding, "we're starting to go in the right direction." Still, he said, "It's hard to hold up your hands in victory when the medical cost trend is about double the rate of [overall] inflation." He noted, "Eventually you do reach a limit and there are other things society needs to spend money on" (Sullivan, The Hill, 6/9).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.