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Bad news for clinicians: The cost to provide care is only going to go up next year, experts project.
In 2025, medical costs are projected to increase 8% in the group market and 7.5% in the individual market—the highest levels seen in 13 years—according to an analysis from consulting firm PwC’s Health Research Institute. The anticipated rise is mainly pinned on inflationary pressure, expensive pharmaceuticals, and an increasing number of patients seeking mental health care, analysts found.
PwC analysts surveyed actuaries at more than 20 US health plans to estimate 2025’s medical cost trend, which the researchers define as the percentage that the cost to treat patients is projected to increase if insurance benefits stay the same.
“The same inflationary pressure the healthcare industry has felt since 2022 is expected to persist into 2025, as providers look for margin growth and work to recoup rising operating expenses through health plan contracts,” PwC analysts wrote.
GLP-1 use is a primary cost driver cited in the report. Analysts predict GLP-1s will only become more popular, as they’re being studied for use in more disease states, including sleep apnea and addiction, potentially driving costs up even further. Currently, these drugs cost patients between $900 and $1,350 per month before insurance, CNBC reported in March.
In the long term, GLP-1s may actually save costs. Diseases these drugs treat, like Type 2 diabetes and heart disease, “carry significant medical and economic costs,” the analysts noted.
But it’s still too early to tell just how much of a cost-savings benefit the drugs could eventually have.
Outside of GLP-1s, other types of innovative pharmaceuticals, like drugs to treat Alzheimer’s disease and cell and gene therapies, are also likely going to drive costs up due to projected high use and cost, the analysts found.
On the positive side, the analysts projected that biosimilars could help control pharmaceutical spending, noting an uptick in the use of biosimilar versions of AbbVie’s Humira, an inflammatory disease drug that was the best-selling pharmaceutical in the world for 20 years.
While adoption was slow at first, more patients have started using biosimilar versions of Humira since April 2024, when the first private-label biosimilars came to market, according to the analysts. However, over 80% of Humira patients are still taking the original version of the drug, Reuters reported in June.
Overall, the steep rise in medical costs is an unfavorable sign for the industry, the report concluded.
“Today’s medical cost trend is an urgent call to action for healthcare organizations to rethink their strategies to manage the total cost of care more effectively,” the analysts wrote.