After design changes, health care costs will increase 5.5 percent in 2017

In 2017, health care costs will increase 6.5 percent, but after likely changes in benefit plan design, such as higher deductibles and co-pays, the net growth is expected to be 5.5 percent, according to recent research from PricewaterhouseCooper’s (PwC) Health Research Institute (HRI). The report, Medical Cost Trend: Behind the Numbers 2017, noted that while cost increases are low, medical inflation still outpaces general economic inflation. In addition, PwC notes that there are signs that the decade’s slowing medical cost growth rate could start to climb again as new health care access points increase utilization.

The PwC report breaks health care costs down into separate components. Roughly half of all medical costs come from hospital spending: 30 percent from hospital inpatient and 19 percent from hospital outpatient. Physicians account for another 30 percent, and prescription drugs account for 17 percent. PwC noted that it is important to understand the weight of these components to put health spending in context. For example, with prescription drug spending, individual drug costs can be high enough to garner national media attention but, as a whole, are a relatively small portion of total health spending: a 10 percent jump in the growth in prescription drug spending would increase the overall medical cost trend by about 1.7 percent, the report noted.


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