US employer medical spending will climb 6% next year.

Medical costs for US employers are expected to grow 6% in 2020, marking a four-year high following a plateau in growth that’s persisted since 2017, according to a new PwC report.

Specifically, we’ll likely see an upsurge in employer spending on drugs and on care for the swelling volume of adults living with chronic illnesses: 62% of adults covered by an employer health plan have a chronic or complex chronic condition, and these individuals rack up as at least 3.5 times more in costs than healthy employees.

Virtual care has shown promise for employers in mitigating overall healthcare spending. By steering employees toward telehealth, employers saved $216 per visit via First Stop Health, for example. And employers should be able to herd a significant portion of employees over to virtual care, considering almost half of consumers said they’d be willing to ditch traditional in-office visits for telehealth.

For this research, HRI conducted 55 in-depth interviews with health industry executives, health benefits experts and health plan actuaries whose companies cover more than 95 million employer-sponsored large group members. HRI also analyzed results from an HRI national consumer survey of 2,500 US adults as well as from PwC’s 2019 Health and Well-being Touchstone Survey of more than 550 employers from 37 industries.

Other key findings on PwC’s Health Research Institute were:

• HRI projects 2020’s medical cost trend to be 6%. This is up over the flat trend seen in 2018 and 2019, revised estimates coming in at 5.7% for both years.
• Prices continue to be the primary driver of healthcare spending, growing at a faster rate than utilization.