Health care spending growth rate down, but affordability is key

Despite projecting a slowed health care spending growth rate in 2016 down from 2015 levels, health care companies have to do more to provide affordable choices to consumers and companies going forward, according to a report issued by PricewaterhouseCoopers Health Research Institute. Additionally, increased competition will require health care innovation in order to keep restrain costs.

Growth rate deflation factors. The health care growth rate is expected to deflate in 2016, which the report concludes is due to three main factors. First, Section 9001 of the Patient Protection and Affordable Care Act (ACA), imposes a “Cadillac tax,” on high cost employer-sponsored health care plans that goes into effect in 2018. The ACA imposes a 40 percent tax on health care plan premiums over $10,200 for individuals and $27,500 for families. According to the report, the impending tax has already caused employers to require employees to contribute more to their health care plans. Consumers, faced with increased costs, will scale back and search for alternative services. Second, the increased use of telehealth, or virtual health care visits, is expected to bring down costs. Third, new health advisers are assisting consumers in making better and more efficient health care plan choices.

Factors increasing costs. The report identified factors that it concluded will increase health care spending in 2016. These included the rise in specialty drug approvals that will drive up coverage costs. Additionally, spending on cyber security will increase as a result of large-scale data breaches that have occurred recently.

Recommendations. While the report concludes that health care spending will be kept in check, such spending still outpaces the gross domestic product and companies and consumers are struggling to afford health care. Health care companies need to constrain costs and provide consumers with new technologies and cures. Therefore, companies should provide consumers with greater transparency and opportunities to seek remote care and price comparison shop.

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