The all new
CBS News App for Android® for iPad® for iPhone®
Fully redesigned. Featuring CBSN, 24/7 live news. Get the App

Medical cost inflation to ebb in 2014


(MoneyWatch) Medical cost inflation will rise less in 2014 than in any point in recent history, according to a new report by PwC's Health Research Institute. A host of trends -- from corporate wellness programs to moving care out of emergency rooms and into less expensive retail locations -- is expected to hold back the rapid rise in the amount Americans spend on health care even as an increasing number of Americans gain medical insurance through the Affordable Care Act, the PWC report says.

Before anyone gets too excited, be aware that the projected 6.5% medical inflation rate in 2014 continues to outpace growth in personal income and overall inflation. But it still indicates progress in the continuing effort to "bend the curve" in health care spending that would otherwise force people to spend an unsustainably high percentage of their wages on medicine.

"Healthcare cost increases continue to exceed overall growth in wages, but the gap appears to be shrinking. The long-term trends suggest that as the economy improves, the cycle of runaway cost increases will be broken," said Michael Thompson, principal with PwC's human resource services practice.

The news is not quite as positive for the average consumer, however. Part of the reason costs are ebbing overall is because consumers are shouldering more of the tab. There's been a sweeping trend to high-deductible health plans that cause employees to pay a greater portion of health costs before insurance reimbursements kick in. The average deductible for in-network care has risen to $1,000, while out-of-network deductibles now average $2,000, the report says.

In addition, the cost of emergency room and prescription co-payments have soared. Between 2009 and 2013 emergency room co-payments have jumped 50%, according to the report. Meanwhile, the cost of co-payments for specialty drugs rocketed 94%. Those higher costs are affecting consumer decisions on when and how to get care, according to PwC's report.

For instance, the use of retail clinics, where the cost of care is two-thirds cheaper than getting care in doctor's offices or hospitals, has tripled over the past five years. PwC expects use of these alternate forms of care, particularly for minor ailments, to continue to gain acceptance -- a pivotal factor in keeping health costs down. Going to an emergency room to treat sinusitis, a cold or flu costs roughly $499 per visit, for instance. Getting health advice over the internet through an "e-visit" costs $39, while visiting a retail health clinic costs $76. Even going to an urgent care center for $121 is less costly than emergency room care, the report says.

On the other hand, other factors continue to push costs higher. For example, while patents for many blockbuster drugs are expiring -- which should lead to an increasing number of cheaper generic alternatives -- drug companies are coming out with an increasing number of high-priced specialty drugs. In 2010, the FDA approved more specialty drugs than ordinary medicines for the first time in history and that trend has only gained steam over the past three years, according to the report.

The PwC health cost survey is conducted each year to help employers and insurers determine how much to charge workers for health premiums. The consulting firm expects premiums to rise just 4.5% in 2014, despite the 6.5% rise in health costs. The remaining inflation rate will be passed through to employees directly through higher co-payments and deductibles. In fact, the survey found that 44% of employers were considering offering a high-deductible health plan as the only choice for rank-and-file employees.