Saturday, 8 April 2017

Chit Chat: Medical Cost Trend 2017

The growth rate in medical costs continues to remain consistent but is expected to go above economic inflation. Cost saving strategies need to be recalibrated in the months ahead as the older ones are no longer viable. Around half of the employer health costs come from inpatient and outpatient spending but prescription drug costs are now increasing. The drug spend is around 17% of the total costs, which is still quite small. 

Two cost inflators are convenience related costs and increasing available access for behavioural health. There is a demand for convenient ways of obtaining care, but the increase in costs now may mean reduced costs in the future. Behavioural healthcare use is now considered to be mainstream and it now is an important part of the health benefits provided to employers.

Speciality drug costs are reducing and not growing as fast as they have done in the past. PBMs are another cost deflator as they introduce new aggressive strategies. Political pressure is also expected to keep the cost of drugs in check. High-performance networks are being explored as a way of improving quality while lowering costs.
Employers are working to find ways of reducing costs by considering:
  •          High performance networks
  •          PBM arrangements
  •          Realignment of cost sharing for ambulatory services

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