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Employer health care costs expected to rise 6 percent in 2020

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An annual survey conducted by PwC’s Health Research Institute (HRI) has revealed an increase in health care costs for employers as well as for their employees. The survey also indicates a number of unique strategies planned by employers to help reduce those costs. HRI surveyed health industry executives and benefits experts and combined those results with the results from a national consumer survey and a survey of more than 550 employers to compile the report, “Medical cost trend: Behind the numbers 2020.”

Among the key findings in the survey, HRI found that:

  • Drug spending will grow faster. Over the next seven years, “retail drug spending under private health insurance is projected to increase at a rate of 3 percent to 6 percent a year.”
  • Chronic diseases will continue to plague the populace. Chronic diseases such as diabetes and obesity contribute significantly to the higher costs of healthcare. HRI states that “sixty percent of adults have a chronic disease, with 40 percent managing two or more.”
  • Employees and their families will take advantage of greater access to mental health services. When employees are dealing with mental health challenges, the costs of their care can rise dramatically. HRI concludes that “in the long term, employers may find that addressing mental health is a powerful deflator of medical cost trend.”
  • Employers will continue to open more expansive worksite clinics. The survey found that “38 percent of large employers offered an onsite health clinic in 2019, up from the 27 percent that offered a clinic in 2014.” Another 13 percent of employers surveyed stated that they were considering offering their employees the benefits of a worksite clinic.
  • Employers and payers will nudge people toward lower-cost sites of care. Less expensive options such as telemedicine are growing in popularity with employers and employees.
  • More employers will help employees maximize their benefit packages. The survey found that “More than 80 percent of consumers surveyed by HRI with employer-based insurance would be interested in a ‘menu’ of options for care across virtual and physical settings.”

The HRI report concluded that “2020 likely will be, in some ways, a turning point in the long arc of employer-sponsored insurance, a year in which more employers fight back using new tools and strategies to control the ever-growing costs to their own organizations, their employees and their families.”