America's medical cost inflation appears on track to fall even below 2013's trends, according to PricewaterhouseCoopers, although consumers are still bearing large cost burdens and other trends threaten the slowdown.
In a new report, PwC is projecting a 6.5 percent medical cost increase in 2014, one percent lower than the estimates for 2013, based on analyses of costs for the 150 million people covered through the large group insurance market.
After accounting for benefit design changes, among them higher deductibles, the net growth rate for next year is expected to be about 4.5 percent, according to the consulting and research firm.
In addition to the Great Recession and still-recovering economy -- which a separate Harvard study recently found accounts for about one-third of the recent slowdown in health cost increases -- PwC analysts think four factors are helping "deflate" the medical cost trend as 2014 approaches.
One of those in the increasing priority of convenience for consumers, like telehealth visits, retail clinic and urgent care centers, because those settings also happen to be more efficient than, say, visiting a hospital emergency room.
Another factor is insurers increasing use of narrow networks with designated high performing providers. Some large employers, notably Boeing, Lowe's and Walmart, are also contracting directly with health systems for procedures like heart surgery..
With the federal government's prodding, hospital readmissions are declining -- with an estimated 70,000 fewer in 2012 than in 2011 -- and PwC expects that trend to continue in 2014, as penalties increase.
The fourth "deflating" factor, according to PwC is high deductibles "going mainstream."
In a PwC survey, 17 percent of employers offer high deductible plans as the only option, and 44 percent are considering moving to them as the only option.
Even in just the past few years, deductibles have soared. According to PwC's surveys, average in-network deductibles in 2009 were $680, and $1,000 for out-of-network. In 2013, average in-network deductibles were more than $1,200 for the workers of employers PwC surveyed, and more than $2,000 for out-of-network care.
Meanwhile, two factors could offset some of slowdown, according to PwC: speciality drug costs and consolidation.
Generics have been helping hold down medical cost inflation, "but the rise of expensive complex biologics will nudge spending upward," especially in cancer care, PwC analysts are predicting. (In legislatures across the country, lawmakers, the pharmaceutical industry and payer groups are debating the emerging issue of "biosimilars," generic forms of biologic drugs.)
And with health industry consolidation increasing more than 50 percent since 2009, "higher prices are sure to follow in some markets," especially in regions with one dominant health system, the report said.