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Health care costs expected to keep rising nationwide

Health Care and Health Insurance
by Josh Hammerquist
Recession could lead tens of millions to lose health insurance
Recession could lead tens of millions to lose health insurance

Since the Patient Protection and Affordable Care Act was passed in 2010, the rate at which health care costs have increased each year has, generally speaking, been slower than before it was implemented. Nonetheless, costs are high and still rising, and it's creating issues that are being carefully monitored within the health care sector, by consumers writ large and even at the federal level. That trend is expected to continue into 2019 - and likely beyond.

The rate at which health care prices are expected to rise over the course of 2019 is about 6 percent, pretty much in line with the levels seen in each of the last five years, during which time upticks have ranged between 5.5 percent and 7 percent, according to the latest projections from PricewaterhouseCoopers' Health Research Institute. This comes at a time when it seems as though efforts to curtail national health expenditures by relying less on care providers in general (i.e. reducing utilization of care) don't seem to have had an impact on growth.

The health care industry continues to see higher costs.The health care industry continues to see higher costs.

A closer look
Growing consumer demand for health care has actually driven costs up in terms of what providers are trying to address; by giving more flexibility to consumers in terms of how they get care, there has been a short-term increase in costs as providers expand infrastructure, the report said. In addition, a number of massive mergers between care providers has likewise increased costs, at least temporarily, while also scooping up more doctors to work as employees in their systems. The latter is an issue because doctors working as part of medical groups, in hospitals, or as employees of broader health systems tend to charge more for their services than those who operate independently.

At the same time, it's likely that health care cost increases will remain somewhat depressed next year for a number of reasons, the report said. This includes the fact that the 2019 flu season isn't expected to be as bad as it was in 2017 and 2018, and that care providers are looking for ways to streamline their costs. Nonetheless, health care companies have a lot to think about as a means of ensuring patients can get the care they need, when they need it, without going into potentially significant medical debt.

This also comes at a time when providers are likewise seeing their own costs for employee care increase along with every other industry, according to CNBC.

"How do you drive out unnecessary utilization, while maintaining very high quality?" Brian Gragnolati, CEO of Atlantic Health System in New Jersey, told the network. "We've got a lot of experiences with that so what we're trying to do here is take those best practices and apply them to our own workforce. If you're spending more money on benefits, it's less money that you can spend on wages. The opportunity for savings here allows us to put more in our employees' pockets."

Other considerations
At the same time as PwC's analysis looks at the cost of care itself, it's also worth reflecting on why insurance health costs are on the rise as well. For instance, while rising care costs are certainly a driver of higher insurance premiums, so too are the machinations around federal health care legislation and the potentially unsteadying effects they have on the insurance industry, according to the American Academy of Actuaries. This could be particularly true when it comes to how the state and federal individual insurance marketplaces are regulated.

As a consequence, while it may be difficult to make a more fine-tuned prediction because of the uncertainty still lingering in the market, average national premiums could rise anywhere between 5 percent and 8 percent for 2019, the AAA said. 

"The individual market, which had shown signs of stabilizing, now faces a potential deterioration of the risk pool due to policy changes that reduce incentives for healthy individuals to enroll in ACA marketplace plans," said Academy Senior Health Fellow Cori Uccello. "This deterioration and other factors could drive premiums higher for 2019."

Indeed, the U.S. Department of Justice recently announced that it would support a lawsuit brought by a number of states trying to argue that certain aspects of the ACA are actually unconstitutional, according to Consumer Reports. It's therefore likely - due to the rarity with which Justice sides with states in disputes over federal law - that this decision could end up dramatically reshaping the ways in which certain people obtain health insurance, but particularly people with pre-existing conditions, women and the elderly.

These are all issues for those in the insurance and health care industries to monitor closely as time goes on, because any changes to federal law regarding how care is covered or sought could end up having a massive impact on the ways in which they do business going forward.



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