Insurers positioned to curb medical spending growth
Health spending rates are only expected to increase a historical low 7.5 percent by 2013, and that growth is even lower--only 5.5 percent--when changes in insurance benefits, including higher deductibles and copays, are considered, according to an annual report released Thursday from PricewaterhouseCoopers (PwC).
The 7.5 percent that PwC forecasted in its report contrasts with projections of a 2.4 percent growth in gross domestic product and a 2 percent increase in consumer prices in 2013, according to Reuters.
This is also the fourth straight year in which the annual medical cost increase is less than 8 percent. "Four years of historically low growth is noteworthy, and we may be at the start of a new normal," Ceci Connolly, managing director of PwC's Health Research Institute, told Bloomberg.
That's good news for insurers because it helps them reel in high medical costs. And because offering health plans with higher deductibles and copays and successful wellness programs tend to dissuade or prevent unnecessary purchases, insurers could help temper rising costs by incorporating these options into more of their plans.
To capitalize on this lower medical cost trend, PwC said insurers should take a few key steps, including better aligning incentives and empowering consumers. "Health plans will have to educate consumers, build plan awareness and distinguish themselves by creating meaningful connections with members," the report said. For example, insurers could bundle complementary products or reach out to consumers in venues they frequent like grocery stores and retail outlets, according to PwC.
Insurers also should establish consumer trust, which likely will have significant swaying power on consumers' purchasing decisions. PwC suggested, for example, that insurers continue building their social media and mobile communication efforts. The report recommended that insurers collaborate with stakeholders, working with employers to improve value-based design and providers to coordinate data analysis.
Promoting price transparency is another way insurers can help ensure medical costs stay flat. Cigna, for example, recently launched a new online price comparison feature available for 200 common medical procedures. The comparison tool provides estimates based on actual claims payments, thereby providing an actual valuation of the doctor's fee and any related services, such as diagnostics and anesthesia, as well as hospital costs. "We want to help our customers get the most out of every healthcare dollar," Jim Nastri, Cigna's vice president for cost and quality transparency, told PwC.
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