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Consumers, meanwhile, who are paying a greater share of the cost, are making spending adjustments.  Many are delaying care, using fewer services and choosing less expensive options such as retail clinics, urgent care centers and mobile health devices.

“Healthcare cost increases continue to exceed overall growth in wages, but the gap appears to be shrinking.  The long-term trends suggest that as the economy improves, the cycle of runaway cost increases will be broken,” said Michael Thompson, principal with PwC’s human resource services practice.  “This is critical as employers strategically reevaluate the role of healthcare benefits to their organizations and step up efforts to engage employees more directly in value-based healthcare decision making.”

Medicare covers all those treatment options. By law, it can't consider price when making coverage decisions. Nor can it insist that a new technology be significantly better than existing ones or encourage doctors or patients to seek less-costly alternatives. And once Medicare starts writing checks, private health plans generally follow, distorting the usual market mechanisms, says Arthur Kellermann, a physician and senior policy analyst at Rand Corp.

Another big driver of health-care costs is technology. In almost every other industry, innovation generally makes things more efficient and less costly. But in health care, it often brings higher costs with little added value.