Even though experts predict healthcare costs to increase by over 6 percent in 2017, this is actually a significant drop after the past few years when cost increases easily doubled the predictions for 2017. Numerous factors influence both increases and decreases, with decreasing factors helping healthcare costs to stabilize compared to recent years.
Reasons for Cost Increases
Rising healthcare costs is nothing new. Most people see an increase in health insurance premiums each year. In 2017, two of the biggest factors leading to increased costs are convenience and behavioral healthcare.
Convenient healthcare is still somewhat new, but experienced rapid growth over the past decade. Experts expect it to lead to decreased costs down the road, as more people take advantage of the convenience of retail healthcare clinics. As the industry is still in its infancy, the cost of growth influences overall medical costs, with the average person spending around $14 more per year on convenient healthcare.
The trend arose along with consumers’ desire for a more patient-centered healthcare approach and a level of care many find missing in traditional providers. More and more, patients look for providers who stress quality care over quantity care. These retail providers willingly fill that role, adapting quicker than most of the large providers do.
Another factor increasing healthcare spend is behavioral health, with employers and providers alike recognizing the connection between mental health and total body wellness.
For employers and insurers, this is due in part to new regulations requiring coverage for behavioral health issues. As more people receive this increased coverage, with employers covering more of the costs, more of them take advantage of it. This is another increase expected to lead to a decrease, as there is a link between many chronic health conditions and behavioral health issues. For example, both diabetes and heart disease have a relationship with behavior health.
Reasons for Cost Decreases
Many of the decreases expected in 2017 relate to employers and providers implementing spending control measures.
One cost-control strategy is high performance networks. These are popular with employers looking to reduce healthcare spending without simply transferring a greater share of costs to employees. These networks reduce the level of choice, replacing it with higher quality options with competitive pricing, leading to significant savings (around 30 percent).
At the same time, pharmacy benefit managers’ negotiation tactics grow more aggressive, taking advantage of competition between pharmaceutical companies. Similar to the value demands placed on healthcare, pharmacy benefit managers want outcome-based drug costs.
The Result for Consumers
Employers and insurers do not intend to absorb these increased costs; much of this trickles down to the consumer. Some employers moved to high deductible plans, and many insurers raised co-pays.
One idea under consideration with around a third of employers is defined contribution plans. Under this plan, the employer contributes a set amount annually toward healthcare, with the employee responsible for amounts in excess of that.
Knowledge and education are key for the consumer. Take charge of your healthcare and do your research to help manage your costs.
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