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PricewaterhouseCoopers: PPACA Reduces Employer Flexibility

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The Patient Protection and Affordable Care Act (PPACA) has not had much effect on the price of medical care, but it has affected employers’ ability to save money by changing their benefits packages, consultants say.

The consultants, at the PricewaterhouseCoopers Health Research Institute, New York, come to that conclusion in a summary of results from interviews with hospital executives, health plan actuaries and other executives and a survey of 1,700 large and midsize U.S. employers.

The consultants looked both at the cost of medical care and the amounts employers are actually paying for care.

The weak economy seems to have reduced U.S. residents’ use of medical care, and that has reduced the increase in the underlying cost of care to about 8%, the institute consultants say.

If the economy were stronger, the rate of increase in the cost of care would probably be about 9%, the consultants say.

For more than a decade, employers and health plans have been using changes in plan design to try to soften the effects of the increases in medical care costs.

This year, because of PPACA mandates, employers and plans have been able to use design changes to reduce their actual cost trend by only 0.5 percentage points, to 7.5%, the consultants say.

In a typical year, employers and plans could have used design changes to cut their actual cost trends by 1.5 percentage points to 2 percentage points.

In 2012, the consultants say, the main drivers of increases in the medical cost trend may be provider consolidation, cost shifting from Medicare and Medicaid, and the effects of recession stress and a pent-up need for health care on consumers’ use of health care services.

- Allison Bell

Other health cost data coverage from National Underwriter Life & Health:


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