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Employer health costs projected to rise 6.5% in 2022 due in part to COVID-19

The return of deferred care will increase utilization and health spending, as will investment in new technologies.

June 9, 2021 / Jeff Lagasse, Associate Editor

Due to a COVID-19 “hangover” — marked by the increased use of medical services combined with more high-acuity patients and digital investments — employer medical costs are projected to increase 6.5% in 2022, slightly lower than in 2021 and higher than the period from 2016-2020, according to an annual report published by PricewaterhouseCooper.

Healthcare spending is expected to return to pre-pandemic baselines, with some adjustments to account for the pandemic’s persistent effects. PwC’s Health Research Institute defines the medical cost trend as the projected percentage increase in the cost to treat patients from one year to the next, assuming benefits remain the same.

The report breaks down trends into two categories: inflators and deflators. Inflators are those trends that are expected to bring up medical costs, such as the lingering effects of COVID-19; deflators are the trends that will have a mitigating effect on rising costs. 

As the biggest inflator, the pandemic “hangover” is expected to increase utilization and healthcare spending in 2022 thanks in part to the return of some of the care that had been deferred during the public health emergency, as well as the ongoing costs of treating the coronavirus, increased mental health and substance use issues, and worsening population health.

Data shows that 15% of American consumers with employer-sponsored health insurance said they had deferred some care between March and September 2020. The rebound is expected to increase health spending, as is testing, treatment and vaccination costs for COVID-19. 

Poor pandemic-era health behaviors will exacerbate this, as many Americans suffered from a lack of exercise, poor nutrition, smoking and increased substance use, PwC found.

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Chris J. Stewart

Chris currently serves as President and CEO of Surgio Health. Chris has close to 20 years of healthcare management experience, with an infinity to improve healthcare delivery through the development and implementation of innovative solutions that result in improved efficiencies, reduction of unnecessary financial & clinical variation, and help achieve better patient outcomes. Previously, Chris was assistant vice president and business unit leader for HPG/HCA. He has presented at numerous healthcare forums on topics that include disruptive innovation, physician engagement, shifting reimbursement models, cost per clinical episode and the future of supply chain delivery.

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