Healthcare spending growth to decrease in 2016

The spending growth for healthcare costs is expected to dip .3% in 2016, due largely to an increase in stock prices, earnings reports and customer base, according to new research.

The dip is expected to be from 6.8% to 6.5%. Even with the predicted medical cost decrease in the $2.9 trillion U.S. health economy, however, it will still outpace overall economic inflation, PwC's Health Research Institute stated in its Behind the Numbers 2016 report. This dip will cap a 10-year trend of slowing employer medical costs.

After interviewing industry executives, health policy experts and health plan actuaries, and analyzing over 1,100 employees from 36 industries,

HRI interviewed industry executives, health policy experts and health plan actuaries — and analyzed 1,100 employees in 36 industries — to come up with the three factors expected to reduce the medical growth rate:

  1. The Affordable Care Act set an insurance excise tax, where employers are upping the amount employees pay for plans, therefore reducing their costs. Although it begins in 2018, the costs are already influenced by it.

  2. New technology improves the quality of medical care, and hospitals using remote monitoring are seeing a decrease in treatment costs.

  3. New, more experienced health advisers assist employees with decision making regarding their healthcare.

Despite these factors, spending could still “inflate” in 2016 because of expensive specialty drugs and sophisticated security protecting health information, report authors warn.

Overall, HRI predicts a net growth rate of 4.5% next year, after accounting for benefit design changes such as higher deductibles and narrow provider networks.

“There is still much to be done as long as health spending continues to outpace gross domestic product and individual consumers and companies struggle to afford services,” the HRI report stated.