MDNews - Lower Hudson/Bronx

ACCORDING TO THE 2019 report released by PwC's HRI, analysts anticipate a 6% increase in healthcare costs in 2020 in the employer insurance market and a 5% net growth rate after factoring in adjustments to insurance plans, such as an increase in cost sharing and changes to benefit packages. The report attributes this upward trend to swelling prices — not utilization. In fact, general confusion around healthcare access and the prevalence of high-deductible health plans and other cost-sharing practices have caused utilization trends to plateau around 0% since 2006. "Very few Americans choose to voluntarily engage with the healthcare system for trivial issues," says Niall Brennan, MPP, President and CEO of the Health Care Cost Institute. "Between the financial implications and the hassle factor of interacting with a system that is often difficult to navigate, people tend to avoid any care they deem unnecessary." That isn't slowing price spikes, however. Drug spending by private health insurers, for instance, is projected to increase by approximately 3–6% every year between 2020 and 2027 — largely due to increased manufacturing of expensive specialty drugs and the waning impact of generics. "We've essentially hit a saturation point on generics," says Barbara Gniewek, Partner at PwC. "Nearly 90% of the drugs currently dispensed are generics, and the majority of new drugs being introduced in the next couple of years are biologic specialty drugs, which are very expensive and less likely to have generic equivalents, known as biosimilars. Our research also shows that many of the biosimilars that have been developed are not getting approved in the U.S. as quickly as they are in other places, and that those that have been approved are often not getting prescribed." An increasing number of patients with chronic diseases is also expected to impact healthcare costs. According to recent data, 6 in 10 U.S. adults have a chronic condition, and 4 in 10 have two or more. On average, individuals with chronic conditions that affect one body system cost their employers over three times as much as healthy individuals. Those whose chronic conditions affect two or more body systems and necessitate complicated disease management cost employers over eight times as much. Lastly, the report cites growing access to mental health services as another expected inflator. However, analysts believe this particular uptick in costs will be temporary. "We know from our study that individuals with mental health issues often cost employers more than individuals who don't have mental health issues, particularly when coupled with chronic health conditions," says Benjamin Isgur, Leader of PwC's HRI. "Supporting employees in identifying and managing mental health conditions allows them to be healthier and more productive. It keeps them on the job, reduces absenteeism and actually decreases healthcare costs in the long term." A RISE IN EMPLOYER ACTIVISM While most Americans have employer-based health insurance plans, a recent report by the RAND Corp. found that private health plans pay an average of 241% more for healthcare services than Medicare. This kind of discrepancy has many employers more proactively seeking ways to lower costs. For example, the HRI report predicts employers will grapple with these increases by helping patients customize benefit packages to meet their individual needs and guiding them toward lower-cost care, such as telehealth or appointments with a provider with whom the employer has negotiated a reduced price. "Some [employers] are trying to create an online healthcare hub or application that helps employees better understand their options and allows them to access important benefit-related information more easily," Gniewek says. "Others are creating programs that allow employees to reach out to an advocate to discuss their healthcare options and the cost and quality implications of those options." Another potential cost deflator in 2020 is an increase in work-site clinics. Such clinics provide employers with more control over pricing and quality and reduce absenteeism. In addition, Isgur notes, they tend to increase employee satisfaction and encourage employees to become more actively involved in their health care, which can reduce the likelihood of bigger healthcare expenses later. MOVING FORWARD Michael Thompson, President and CEO of the National Alliance of Healthcare Purchaser Coalitions, says employers should take an active role in advocating for pricing transparency and against unchecked price surges. If that does not work, he believes employers may eventually push for stiffer regulations. "Employers are seeing that past market consolidation hasn't worked to their benefit," Thompson says. "It hasn't improved quality of care, and, in some cases, it has allowed some of these healthcare entities to function like monopolies, which has led to pricing that is frankly inequitable and unsustainable. If they cannot find a market-based solution to combat these costs, I believe employers will eventually seek to regulate these entities like utilities. Most hope to avoid this, but they may come to feel as if they have no other choice." n " Employers need to continue to monitor the data in order to ensure they are managing their programs and benefit offerings effectively, and this requires looking beyond costs at other factors, such as utilization and quality. You need to know what is working, what is not and why." — BARBARA GNIEWEK, PARTNER AT PWC M D N E W S . C O M /// M D N E W S L O W E R H u D S O N / B R O N x ■ 2 0 2 0 1 7

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