The cost of treating patients is rising: PwC explains what’s behind the 2024 medical spending figures – News Block

The health care cost trend will rise another percentage point to 7.0% by 2024, according to the PwC Health Research Institute’s annual report, Medical Cost Trend: Behind the Numbers 2024.

Each year, PwC’s HRI team goes beyond those numbers to assess the cost inflators and deflators that underpin annual medical inflation.

As the chart on the first line illustrates, the peak of the medical trend over the last 18 years was in 2007, when the US experienced double-digit cost growth of almost 12%.

Here’s a link to the 2007 PwC study that looks behind the numbers and notes that the 11.9% medical cost trend was driven by,

  • Inflators such as new treatments and prescription drugs, increased demand, changing costs, and declining health status among patients attributable to obesity and general aging leading to more costly conditions; and,
  • Deflators such as cost-sharing (since consumer-directed health plans were allocating more costs to health plan members who had “more skin in the (financial) game), price transparency was making some health care expenses more “affordable,” the growth of electronic health records lowering administrative costs, and health and wellness programs that began to generate ROI for certain population health challenges that the programs were targeting.

PwC identified the inflators and deflators in the medical cost trend as,

  • Inflating inflators for hospitals and doctors due to labor shortages and exhaustion of doctors and rising cost of pharmaceuticals
  • Deflators include the offsetting impact of biosimilars entering the market offsetting part of prescription drug price growth, as well as shifting care sites to home and closer to home in lower cost community settings.

Take prescription drugs that push the medical trend up. The graph on the median price of newly marketed drugs between 2008 and 2002 shows that the cost in 2022 reached $222,000. Since 2019, we can see the rapid increase in the price of specialty drugs in the hockey stick.

At the same time, countervailing downward pressure on Rx prices comes from the growth of biosimilar products coming into production, with an average price 50% lower than the reference price of products at the time of biosimilar launch. . In 2023, the launch of Humira’s biosimilar is considered a “new milestone” for biosimilars in the US.

Here’s an in-depth analysis from GoodRx on the launch of at least 9 Humira biosimilars by 2023, predicting that this product alone could have a major impact on the total cost of prescription drugs in the US for the medical trend. by 2024. What NPR coined as a 20-year, $200 billion monopoly for AbbVie could quickly bottom out. Goodroot forecast the impact of Humira’s biosimilars, developing this table in the report that shows the potential competition for that monopolistic franchise.

Expecting to see 12 biosimilar products to replace Humira by 2023, Goodroot states that “competition will largely depend on the economics dictated by AbbVie. If they increase their reimbursement, it will be almost impossible for biosimilars to have the cost impact (savings) that many expect,” noting that there could be a tipping point in the price of biosimilars where a large enough differential could motivate payers. to change the forms. to biosimilars by, say, 50% or more.

Another key change that serves as a deflator for the medical cost trend is the shift in place of care, to homes, community-based places of care, and outpatient health care settings, such as medical centers. outpatient surgery. PwC highlights this transformation that has accelerated the COVID-19 pandemic, when the report notes that outpatient care settings recovered faster compared to other delivery sites in the healthcare system.

We have entered a new phase in US healthcare, PwC warns, with virtual care becoming part of more hybrid and omnichannel healthcare delivery models to help health plans offset the factors of cost that force the curve up and to the right.

Additional trends to observe will be,

  • Ongoing efforts to manage the total cost of care (i.e., value-based models of care)
  • A hangover from COVID, driving vendor unit cost increases and pharmacy trends
  • Behavioral health and mental health services are growing, and,
  • Health equity receives more attention and resources in both the public sector (eg, CMS) and the commercial/private side of health plan strategies.

For this study, PwC conducted 21 surveys and 12 interviews between April and May 2023 among health plan actuaries covering approximately 100 million employer-sponsored lives and 10 million members of the ACA marketplace.

Health Populi Hot Spots: PwC summarizes the “heart of the matter” at the beginning of the report: that the cost of treating patients is rising.

There was something of a two-year hiatus in health care cost inflation driven in large part by patients avoiding preventive screenings and in-person visits and stays at hospitals and clinics.

That is history.

More patients are returning to healthcare, abandoning their personal health mitigation strategy of “medical distancing.”

But “showing up” to healthcare has begun to morph into new formats beyond just “going to the hospital” or a doctor-physician encounter.

We are in an emerging era of omnichannel healthcare where many patients feel and act more empowered to buy medical appointments (for example, through ZocDoc), take advantage of digital front doors via telehealth, or encrypted messaging on patients with providers, and taking advantage of remote mental health therapy with counselors who weren’t as readily available before the pandemic.

We live with and must plan for these ongoing changes, whether we work in provider organizations, health plans, pharmaceutical and life sciences companies, and certainly in technology and retail/healthcare organizations. While the cost of treating patients is rising, rest assured that the patient as payer will determine much of that expense.

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