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2020 may be a turning point on health care costs

A red cross in a chair in a cubicle
Illustration: Rebecca Zisser/Axios

Employers will likely step up their efforts to rein in health care costs next year, a new PwC Health Research Institute report predicts, partially because they've nearly maxed out their ability to offload costs onto employees.

What they're saying: "2020 likely will be, in some ways, a turning point in the long arc of employer-sponsored insurance, a year in which more employers fight back," the report's authors write.

The big picture: Employers' medical costs are expected to rise by 6% next year, thanks to drug costs, chronic diseases and greater access to mental health care.

  • Employers have handled rising health care costs over the last decade primarily by increasing employees' cost-sharing, but that strategy may have run its course.
  • At least one-third of employees in the HRI survey said they didn't have enough money saved to pay their deductible.
  • Employers “are at a very interesting kind of crossroads ... and now it's time to get active and start working on price," said Ben Isgur, HRI's leader.

Between the lines: Nothing keeps business' health care costs in check better than healthy workers — and employers are getting increasingly hands-on in that pursuit.

  • They're getting more active in the delivery of primary care, including worksite health clinics. Some are also negotiating contract prices and setting up their own provider networks.
  • Employers can also nudge employees toward lower-cost providers and more efficient forms of care — for example, trying physical therapy before surgery.

The bottom line: Employers are the health care system's sleeping giant. Prices will go down when employers decide to use their massive political and financial leverage.

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