June 2018 report from PwC's Health Research Institue (HRI)

Employer medical cost trend has plateaued. While the predictability is a welcome change from the wild swings and peak double-digit trends in the 2000s, steady as she goes is not good enough. Medical costs continue to grow as a percent of total employee compensation, making even the current trend unsustainable.

PwC’s Health Research Institute (HRI) projects a 6 percent medical cost trend in 2019, consistent with the 5.5-7 percent range of the previous five years. But employers continue to struggle to contain their employee coverage costs. Medical costs continue to grow, yet the workforce’s health and performance aren’t improving. Average labor productivity growth of 1.1 percent over the last 10 years falls far below the 2.3 percent average of the last seven decades.1 Efforts by employers to cut utilization have mostly run their course. Employers and consumers are plagued by high prices that continue to grow because of new, expensive medical services and drugs, and other factors, such as consolidation. HRI’s analysis measures anticipated medical cost trend in the employer-based market, which covers about half of non-elderly Americans.2 Changes to government health insurance, including Medicare, Medicaid and plans sold on the public exchanges created by the Affordable Care Act (ACA), are not within this analysis’ scope.