Healthcare spending growth to dip in 2016 on high-deductible surge, report says
"Cadillac tax" on high-priced plans is also contributing to the spending decline.
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Healthcare spending growth is projected to fall to 6.5 percent in 2016, down from 6.8 percent growth this year, according to PricewaterhouseCooper’s Health Research Institute, as high deductible plans and other factors shift costs to employees.
After accounting for changes in benefits, the Health Research Institute projects a net growth rate of 4.5 percent in 2016.
According to PwC, the Affordable Care Act’s “Cadillac tax” on high-priced plans is also contributing to the spending decline and accelerating the cost shift from employer to employee. The excise tax, which went into effect Jan. 1, 2008, levies a 40 percent tax on every dollar of total premiums paid above $10,200 for individual health plans and $27,500 for family plans.
The research found the ACA otherwise has had a small effect on employer health costs.
[Also: 5 charts on the healthcare spending dip]
Consumers bearing more of a financial burden for their healthcare often choose less expensive options and use health services less often, according to the research.
Despite the year-over-year slowdown, medical inflation still outpaces general inflation, underscoring the challenges ahead for the health industry, according to the PwC.
Healthcare-spending has leveled off over the past decade, but is not declining.
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Two factors driving inflation include new specialty drugs entering the market in 2015 and 2016 that will continue to push spending growth upward; and major cybersecurity breaches that are forcing health companies to step up investments to guard personal health data.
The report also found that high-deductible health plans are now the most prevalent option with 31 percent of employers, up from 26 percent last year.
Also, 38 percent of employers are considering offering only high-deductible plans on top of the 25 percent that already solely offer high-deductible plans.
Spurred by the ACA, 44 percent of employers are now considering moving active employees to a private insurance exchange, while more than 50 percent are considering adopting a defined-contribution approach to financing health benefits.
Twitter: @SusanMorseHFN
