Healthcare Spending Growth Expected to Rise 7.5% in 2013

Tags: healthcare costs | medical costs | PricewaterhouseCoopers | PwC

Medical cost growth is expected to increase 7.5 percent for 2013, the fourth straight year of relatively flat growth compared to inflation, according to a report from PricewaterhouseCoopers' Health Research Institute (pdf).

The PwC report recorded commentary from health plan actuaries, industry leaders, employers and numerous other healthcare reports and surveys. Historically, the medical cost growth has been in the double digits, but since 2009, growth has slowed considerably.

PwC analysts said as patients become more cost-conscious healthcare consumers and healthcare providers and drug manufacturers place a bigger emphasis on value over volume, the mild increases in healthcare spending growth could become indicative of a broader economic shift. "If the structural forces in the industry take hold, the U.S. health system may be entering a 'new normal,'" the report said.

Four main forces, which PwC analysts called "deflators," could continue to slow the medical cost trend in 2013:

•    Medical supply and equipment costs will decline under market pressure.
•    New delivery methods of primary care, such as retail health clinics and telemedicine, will become more popular.
•    Price transparency will exert pressure to lower hospital and healthcare prices.
•    The "pharmaceutical patent cliff" will increase the use of lower-cost generic drugs.

Two factors that will inflate the medical cost trend in 2013 include an uptick in utilization and medical and technological advances.

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