Health care costs are on the rise. In 2024, medical costs overall are predicted to increase by 7%, according to a recent report from consulting firm PwC. Some usual suspects are to blame, like inflation and labor shortages. And some health economists say it isn’t just the underinsured or uninsured who will feel the burden.

In the decade before COVID, medical costs were actually declining. Then they spiked during the pandemic, and went down a bit after. But for the last couple years the cost of health care has been on the rise. That’s all according to the PwC report. 

“It’s the impact of inflation on health care providers,” explained Thom Bales, an author on the report.

He said the cost of medical equipment has gone up and so have provider wages — the health care sector has been squeezed by pandemic burnout and labor shortages.  And, Bales said, pharmaceutical drugs are also more costly.

“The median price of a new drug brought to market last year was actually quite expensive,” he said. “It was about $200,000 or so.”

Bales said there are a couple of things that could help with medical costs.

“There’s biosimilars, which are molecules for drugs that have come off patent that become available, and they are often available at 50% lower than the branded drug.

Plus, Bales said providers are finding ways to cut costs more these days too — making use of lower cost facilities, home health care and telemedicine. But overall, health care costs are are still going up. So who’s going to feel it the most?

Cynthia Cox with the Kaiser Family Foundation said part of that depends on how employers react to rising costs. 

“So if employers shift these health care costs onto their employees by raising deductibles, then that could certainly impact access to care,” she said.

Cox said employers could also choose to offset higher premium costs by lowering costs in other areas, say, by deferring raises or bonuses.

“I would say the working middle class are the ones who will probably be stretched the most,” said Dana Goldman, who co-directs the Schaeffer Center for Health Policy and Economics at the University of Southern California. 

He said the underinsured and uninsured — people who have high deductibles or who pay out of pocket — will certainly feel the pinch.

But, Goldman said he’s cautious about health cost predictions.

“I do think there are these inflationary pressures that are tied to the labor market,” he said. “And so you will see that in the next year.”

But he doesn’t necessarily think these price increases are here for the long term.  

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