2021 Healthcare Cost Trends Are Rising

A recent PwC report expects costs to rise by 4% to 10% in 2021, a sharp increase from recent years. The survey points to mental health utilization and specialty drugs as two big drivers. It also alludes to provider utilization as pent-up demand, in part fueled by cash-strapped providers who suffered financially from deferment of non-COVID-19 care during the height of the crisis. PwC indicates the permanency of telemedicine and the willingness of employers to move to narrowing network choices as an offsetting cost mitigation.

And it is time for the insurance plans to pay the piper for COVID-19 treatment.

Pharmaceutical manufacturer Gilead has priced a typical Remdesivir course of treatment at $2,340 for governmental payers but this increases to $3,120 for private insurance carriers and other commercial payers. A BIG NOTE TO SINGLE-PAYER ADVOCATES – this is a clear example of non-governmental payer subsidization of government-paid cost which would disappear with a single-payer system.

Gilead, in seeking goodwill from governments and the public, pointed out that the typical method of pricing these drugs is by calculating the costs avoided through treatment by the medication. They estimate this care avoidance to be $12,000, so I suppose we should be happy about the relief. Some advocates are outraged and are calling for a $1-per-day price tag. But clearly, the for-profit company has invested significantly in research and manufacturing facilities and deserves to be paid. As I have written many times, I believe drug costs should be regulated since, as evidenced, the public is at the mercy of manufacturers that can charge anything for life-saving medications. I advocate innovator awards where manufacturers can be handsomely rewarded for new drugs, while the patient or their health plan is insulated from outrageous costs for these life-saving elixirs.

But manufacturers, like Gilead, are being very careful. This drug and any COVID-19 medications will be a lightning rod for change, particularly as unemployment rises. Spikes in medical costs are sure to be hit by more recent events.

There are definite changes in the wind.

Walmart is plunging into the healthcare hub space, which CVS has previously claimed. These hubs will include urgent care and will expand services to include primary care, x-rays, behavioral health, optical, hearing and dental care. Expected pricing is $20 for children and $40 per adult per visit. Preventive services like exercise classes and nutrition counseling will also be available. I am happy to see this. Telemedicine and other innovations like the health hubs created by CVS, Walmart and others are greatly needed to ease costs. Hopefully, the valve will release these pressures before they boil over or explode.