One of the Future Trends is the Continuing in Private Healthcare Costs
The impact of COVID-19 continues to be felt, not only amid a recent increase in cases but also through future costs that will be absorbed by employers and consumers in the years ahead.
In our research at PwC's Health Research Institute—PwC's healthcare think tank—we've taken an annual look at medical cost trend projections in our Behind the Numbers report. We define medical cost trend as the projected percentage increase in the cost to treat patients from one year to the next, assuming benefits remain the same. Insurance companies use these projections to calculate health plan premiums for the coming year, so this is a critical number. For example, if we projected a 5% increase in medical cost trend, then a plan that costs $10,000 per employee this year will cost $10,500 next year.
Looking ahead to 2022, the biggest trend we're seeing may be the most obvious—the pandemic's significant, lasting impact on prices and utilization of services. It's not surprising, considering how the crisis has changed so many aspects of our lives—including how we access healthcare. Some have suggested that as a result of the pandemic, American consumers are now suddenly expecting choices about how, when and where they access care, But that's not quite the case. Actually, our research has found that many consumers, especially younger ones, have been open to new ways of getting care for years. The health industry was making steady, slow progress in this area before COVID-19, but the pandemic has served as a forcing event of sorts. Millions of Americans had to figure out how to videochat their clinicians for the first time, and many clinicians had to, for the first time, figure out how to deliver care virtually too. For 2022, we are seeing investments being made in improving that "digital front door," as it has been called.
To keep up with these COVID-19-related costs and other factors, we're expecting a medical cost trend of 6.5% for 2022. That's down from 7% in 2021, and slightly higher than it was between 2016 and 2020. The Health Research Institute has been projecting medical cost trend for years, so I'll note that even 7% is significantly lower than it was in 2007, when we projected a nearly 12% increase.
This 6.5% trend, up over the numbers we were seeing in the years leading up to the pandemic, is one aspect of this long tail of COVID-19. Although it is true that there are additional costs associated with the pandemic, such as administering the vaccines, treating COVID-19 patients and helping survivors recover, some of the inflators of trend for 2022 are a result of investments that are being made by health systems and the rest of the US health industry to prepare for the next pandemic, recover from this pandemic, cover deferred costs, address mental health issues, improve supply-chain realities for essential products and improve digital care.
Moving forward, shifts in how consumers seek treatment likely will impact medical cost trend. For example, visits to the emergency department are a significant spend for employers and consumers; they drive a significant amount of revenue for providers. While providers have been encouraging patients to use non-emergency options for years, 2020 may have been a tipping point as the pandemic drove many non-COVID-19 patients away from the ED. Even during the early months of 2021, visits to the ED were down as the nation shuddered under the weight of the winter surge of COVID-19. Now that consumers are more aware of the options they have when looking for an urgent diagnosis, they may be less likely to visit the ED, opting instead for telehealth visits, asynchronous support and other options. This is one of our deflator trends as this shift away from expensive ED care helps moderate the inflator trends.
In the midst of the big events, it's often hard to clearly see what changes will stick, and which will fade away. It's easy to assume that profound events like pandemics produce profound changes in every corner of life, but these sorts of assumptions often wind up being overstatements as inertia takes over and much of life resumes as before. In the US, for healthcare, we do seem to be seeing some lasting change in the ways people seek care and the way providers opt to deliver it. These changes likely will generate ripples for years to come. Healthcare providers are reacting to these shifts by innovating and creating new access points, all of which will have impacts of their own on medical cost trend down the road.
Trine Tsouderos discussed medical cost trend on a recent episode of our Healthcare Insider. Click here to listen, or find it on your favorite podcatcher.
Additionally, The Next in Health weekly healthcare podcast series hosted by PwC's Health Research Institute addresses industry trends and topics that impact the US healthcare system and consumers.
Trine Tsouderos leads PwC's Business Insights, Sectors team, which produces forward-looking thought leadership on industries including healthcare, technology, media, telecommunications, banking and capital markets, asset wealth management, private equity, energy, utilities, mining, industrial and consumer products and more. Trine also leads PwC's Health Research Institute (HRI), which produces thought leadership on pharmaceutical and life sciences companies, healthcare provider organizations, payers, employers and new entrants. Trine and her team also consult internally with PwC partners and staff to help them aid clients in navigating change.
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Source: https://www.modernhealthcare.com/finance/medical-cost-trend-2022-pandemics-lasting-effects
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