Medical costs projected to rise modestly in 2014

Economy, readmission avoidance attributed to trend
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Medical costs are expected to increase modestly in 2014, according to the consulting firm PwC. It attributes the trend not only to the still sluggish economy, but also to elements of the Affordable Care Act.

Altogether, the PwC Health Research Institute projects medical costs will increase 6.5 percent next year--a full percentage point less than it forecast for 2013. The net growth of healthcare expenditures, after taking into account higher insurance deductibles and changes in benefit design, will be 4.5 percent.

"The tepid economic recovery continues to impact the health sector. The slowdown--and even decline--in personal wealth has tamped down demand for healthcare," said a PwC statement, which noted that this has created a "new normal" for healthcare spending.

Along with the tepid climate for healthcare expenditures, PwC noted that the Afffordable Care Act will prompt hospitals to hold down readmissions in order to avoid penalties, while employers will move to influence employee behavior through offering higher or discounted premiums.

According to Bloomberg News, readmissions were reduced by 70,000 last year due to the penalties to hospitals."It's picking up speed and force (and) will be having a measurable impact across the health system," Ceci Connolly, managing director of PwC's Health Research Institute, told Bloomberg News.

To learn more:
- read the PwC report
- read the Bloomberg News article

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