April 2017 — As we head into second quarter of 2017, it is clear – this will be a year of uncertainty. While it’s difficult to predict what will happen to ACA regulations in the future, employers are sure to face another year of rising health care costs.
We asked Berkley Accident and Health’s clinical risk professionals for their insight. They are on the front lines of large-dollar health claims every day and see the emerging forces that are shaping health care for employers and benefit professionals. Here are the top trends they’re seeing and expect to continue throughout 2017:
- Behavioral health care will increase in cost and utilization
There are a number of factors driving this, including the:
– current opioid crisis
– increased mainstream recognition and decreased stigma among patients seeking care
– inclusion under essential benefits by ACA
– federal parity laws for mental health and substance use treatments
– increased direct-to-consumer advertising, with many providers being out-of-network with unchecked pricing
- Pharmaceutical companies will continue current pricing practices
Cost for older, well-established prescriptions will continue to skyrocket, despite public outcry over perceived price-gouging. Drug companies will continue to deflect criticism by:
1. Offering more coupons to consumers to cover copays/deductibles
2. Supporting “grassroots” efforts to have more of these treatments covered by insurance
3. Continuing to tout their charitable donation efforts and rebates/discounts to insurers
- Specialty Rx drugs will come to market faster
New specialty drugs will be coming to market faster, using orphan drug approvals or the breakthrough therapy process. Unfortunately, even in areas where there is competition, expect to see prices remain the same or even higher. There will continue to be a lot of discussion on specialty drug pricing, but do not expect to see any resolution in 2017.
- Biosimilar drugs will get more attention
Expect to see more biosimilar drugs, or highly similar versions of approved and authorized biological medicines. Two biosimilars are approved right now, with more on the way:
– Zarxio, which is a biosimilar for Neupogen and used in cancer patients to prevent infection
– Inflectra, a biosimilar for Remicade and used to treat several conditions, including Crohn’s, rheumatoid arthritis, and psoriasis
- Policymakers will push federal negotiation of drug pricing
Will 2017 be the year that Medicare gets the right to negotiate prescription costs? Several proposals have been put forward, but their prospects are unclear at this time.
- Telemedicine on the rise
Telemedicine will become a routine benefit for many mid-size to large employers. The telemedicine industry is projected to surpass $30 billion globally by 2020.1 It is viewed favorably by most workers and offers savings to employees, including travel time and much lower copays ($40 for virtual visits vs. $100 for primary care visits). Expect to see more states require coverage for telehealth services.
- Coverage for transgender surgery to increase
Expect to see more employer groups considering plan changes to add coverage for transgender surgery.
- Medical inflation stays at 6.5%, so employers must stay vigilant
PricewaterhouseCoopers (PwC) projects the 2017 medical cost trend to be the same as 2016 – a 6.5% increase. Although hospital spending (both inpatient and outpatient) makes up roughly half of all costs, spending on prescription drugs is increasing. Employers should carefully analyze and continue to aggressively manage the top cost drivers in their health plan.
1 Global Telemedicine Market – Growth, Trends, and Forecasts (2017-2022), Mordor Intelligence, January 2017, mordorintelligence.com.
2 PricewatersCooper (PwC) Health Research Institute, 2017, www.pwc.com.
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