- Average annual healthcare spending for individuals with employer-sponsored insurance grew 4.2 percent from 2016 to 2017, the latest data from the Health Care Cost Institute (HCCI) revealed.
The growth translated to $5,641 per commercially insured individual in 2017, the highest amount HCCI has observed since the non-profit organization started tracking spending, utilization, and prices in its annual Health Care Cost and Utilization Report.
The most recent report used deidentified claims data of individuals up to age 65 years with employer-sponsored health insurance from four of the largest payers in the US — Aetna, Humana, Kaiser Permanente, and UnitedHealthcare. The data represented about 26 percent of individuals with employer-sponsored insurance.
The total average spending amount included $1,097 for inpatient admissions, $1,580 for outpatient visits and procedures, $1,898 for professional procedures, and $1,065 for prescription drugs.
“Healthcare spending growth exceeded four percent for the second consecutive year, outpacing per capita GDP growth,” Niall Brennan, President and CEO of HCCI, stated in a press release. “And for the most part, Americans aren't using more healthcare services, which means we’re essentially paying more and more for the same amount of healthcare.”
As Brennan pointed out, healthcare utilization remained relatively stable during the study’s period from 2013 to 2017. Overall, utilization declined by 0.2 percent during the timeframe.
Specifically, inpatient admissions fell by five percent between 2013 and 2015 before leveling off through 2017.
Outpatient facility visits and procedures, as well as professional services, also decreased in the initial part of the period. Although utilization declines were counteracted by increases in later years. Cumulatively, researchers found little change in utilization between 2013 and 2017.
The number of filled prescription days was the only service category to see increases in utilization. The number of days was stable from 2013 to 2016, then utilization jumped by 3.3 percent in 2017.
With utilization almost unchanged during the period, researchers attributed the growth in healthcare spending to higher prices for services. The data showed that average prices across all service categories increased 17.1 percent from 2013 and 2017, with 3.6 percent growth in 2017.
In terms of service category, researchers found:
- Inpatient prices saw the lowest growth of the entire period at three percent in 2017
- Outpatient prices rose 5.7 percent in 2017, the highest year-over-year growth since 2013
- Professional services had the highest price growth in 2017 at 3.5 percent
- Prescription drug prices had their lowest annual growth in 2017, increasing 1.4 percent
Combining utilization and price data, HCCI researchers reported that spending on professional services accelerated the most during the period, growing 13 percent between 2013 and 2015. Administered drugs experienced the fastest growth, increasing 45 percent over the period despite a 12 percent decline in utilization.
Inpatient spending also increased during the timeframe. Spending rose 10 percent despite a five percent decline in utilization. Rising prices for medical and surgical admissions drove the growth in inpatient spending, HCCI stated.
The non-profit also emphasized that inpatient care for mental health and substance use significantly increased. Admissions steadily rose during the period, increasing a total of 18 percent. Prices for mental health and substance use admissions also increased by 39 percent.
Per-person spending on outpatient services and prescription drugs increased five and three percent, respectively.
The report hammers home an important point. Prices, not utilization, are driving healthcare spending in the US.
A recent follow-up to the landmark 2003 article, “It’s the Prices, Stupid,” found that prices are still the primary reason healthcare spending in the US is significantly more than similar countries. In fact, spending in the US was 25 percent greater than the country with the next highest spending per capita (Switzerland, $47,919).
The research confirms that stakeholders should be targeting healthcare prices to drive down spending. Policies and best practices that focus on price, like CMS’ hospital price transparency requirement, may be the key to finally bending the healthcare cost curve.