PwC’s Health Research Institute is projecting a 7% year-over-year medical cost increase in 2024. The projected medical cost trend in 2022 and 2023 was 5.5% and 6%, respectively.
The new estimate is based on a survey of health plans in the United States covering 100 million employer-sponsored large and small group members and 10 million Affordable Care Act marketplace members.
Inflationary pressures are driving rate increases across the board, experts say.
“In a persisting high inflationary environment, hospitals and providers will often be pushed to seek significant rate increases from payers. The ability of health plans to manage price increases during contract renewals will be a key factor in determining the impact of inflation in the coming years,” according to PwC.
Additionally, PwC noted, workforce shortages add to that pressure. From PwC’s perspective, workforce shortages mean that providers will seek higher reimbursement from payers.
Consequently, according to the professional services firm, health payers are negotiating pricing with providers “while provider profit margins continue to erode. Health plans are also feeling the squeeze of higher median prices for new drugs as well as increasing prices on existing drugs.”
