Telehealth and High Deductibles Slow Health Spending
Growth in US health spending is expected to delcline slightly in 2016 - in part thanks to the success and efficieny of telehealth, which is considered a 'major deflator' in the PWC report.&nbsp;
WASHINGTON -- Growth in health spending is expected to decline slightly in 2016 to 6.5%, a step below the 6.8% trend projected for 2015, according to a report released by the Pricewaterhouse Coopers (PwC) Health Research Institute on Wednesday. The institute also anticipates a two percentage point dip below last year's projections to 4.5% net growth in health spending, after accounting for benefit design changes.

The cost of healthcare has been slowing incrementally for years, said Benjamin Isgur, director of the Delaware-based institute, during a webinar it hosted Wednesday to discuss the report's findings. In 2007, the healthcare spending growth rate stood at 11.9%, but it's still not time to celebrate, he added.

"We're not able to declare victory here. It's one of those things where we're winning a few battles but the overall war of health growth is still there," he said. Medical inflation still exceeds overall economic inflation.

The institute's report defines healthcare growth as "the percentage increase in the cost to treat patients from one year to the next." The report studies per capita costs of healthcare services for commercial insurers and large self-insured companies, but does not explore trends in government health insurance, such as plans sold on the federal and state exchanges.

During Wednesday's discussion, Isgur explained that health plan design changes, such as the growth of high-cost deductible plans and narrowed provider networks will drive healthcare costs downward in the coming year. Telehealth and health advisers -- consultants who help consumers make decisions about health services and treatments -- are also considered major "deflators," or elements that reduce health spending.

The institute's conclusions are based on surveys of health industry executives, actuaries, and experts whose companies support more than 100 million employer-based members. The report also drew upon a 2015 survey of more than 1,100 employers from 36 industries and a nationwide consumer survey that included more than 1,000 adults.

"Cadillac" Tax Looms

The Affordable Care Act's imminent "Cadillac tax," an excise tax that fines employers who offer high-cost health plans -- premiums over $10,200 for individuals and $27,500 for couples and families -- won't be enforced until 2018, but many employers are preparing for that provision now.

Mike Thompson, a PwC principal of Global Human Resources Services in New York, who also participated in the discussion, said, "At every level we're seeing more cost-sharing in the plans, and consumers being engaged more directly in the cost of the care they seek."

This cost-shifting can make consumers more aware of their healthcare decisions, which can be a positive thing. According to the report, close to three in 10 consumers requested a generic instead of a brand drug. However, around one in five consumers reported skipping specialist visits, and one in four did not fill a prescription or took less of a drug than they were prescribed, because of the expense.

Cost also influences where patients go to receive care, explained Richard "Rick" Judy, a PwC principal health services payer in San Francisco. Since 2003, the number of outpatient visits has increased by 12% while inpatient care has dropped by 20%, he continued.

Telehealth a Winner

Telehealth is booming. Isgur predicts a "big jump" in 2016 in telehealth use for primary care among employee populations.

Kulleni Gebreyes, MD, a PwC principal health services provider here, stressed the importance of telehealth or "virtual care" by noting that underlying the ACA's triple aim of lower costs, improved outcomes, and better patient experiences is another significant factor: access.

"Whether it's getting you the right access to care when you leave a hospital after surgery, or if you live in a rural community and you don't have specialists easily available to you ... if you really want to deliver on lower cost, high-quality better experience, virtual care is a key way to do that."

Medicaid now has codes to bill for telehealth charges and Congress is beginning to show more support for such options, she said. State medical boards are endorsing interstate licensure compacts, which allow providers to care for patients across state lines including electronic visits.

While high-deductible plans may seem a mixed blessing, telehealth, on the whole, appears to be having a positive impact on cost.

The webinar participants also addressed "inflators," factors that increase health spending costs. It highlighted two major drivers of health costs: specialty drugs and investments in cybersecurity.

Specialty drugs such as new treatments for hepatitis C, which can cost more than $95,000 for 12-weeks of therapy, and costly cholesterol drugs known as PCSK9 inhibitors, expected to receive FDA approval this summer, have a major impact on healthcare spending. But looking at the cost alone may be short-sighted. "The drug you didn't take or didn't pay for can be quite costly as well downstream," Gebreyes said.

Hepatitis C drugs are expensive, but they offer a cure. And a liver transplant can cost $500,000 or more, she added.

Cybersecurity is similarly valued as an investment. Judy cited a global survey on information security that found 85% of healthcare organizations reported a breach within the last 12 months.

Electronic medical records offer a "treasure trove of information" for hackers, he said. Just one can fetch around $250 on the black market.

And preventive action is cheaper than reactive behavior. In addition to restitution for consumers, a breach in electronic health records leads to fines, lost business, and a damaged reputation.

Looking Ahead

Underlying all of the concerns about the costs of care to employers and consumers alike is a lack of transparency or "lack of usability of information," as Thompson put it. Employers want to help employees make value-based judgments but they struggle to do so.

"One, it's hard to know what things cost, certainly before that service is used, and, secondly, it's hard to know and differentiate about the value of the treatment."

Thompson said he expects to see progress in these area in the next 10 years.

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