Post-recession spending growth is climbing towards pre-recession levels and is largely driven by brand-name drugs, ER visits, and outpatient surgeries.
Private-sector healthcare spending grew by 44% over the past decade, rising from $3,752 per person with employer-sponsored insurance in 2007 to $5,394 in 2016, according to a study by the Health Care Cost Institute.
The recession, the Affordable Care Act, and strategic shifts in care delivery slowed spending growth but it's since rebounded. Spending growth in 2015 and 2016 climb toward pre-recession levels seen in 2007 through 2009, according to the study, which was published online Wednesday in Health Affairs.
The study is the latest to suggest that healthcare spending is accelerating and straining budgets across the economy, from the federal government, to businesses and households.
HCCI researchers examined private employer-sponsored insurance claims for about 40 million people, and found the annual average growth rate was 4.1% over the decade, ranged from 6.3% in 2009 to 2.6% in 2014, and climbed to an average of 4.4% growth in 2015 and 2016.
"Retrospective studies like ours show that healthcare spending is cyclical," study co-authors Amanda Frost and Kevin Kennedy said in an email to HealthLeaders.
"We observed a period of fast spending growth, followed by a period of much slower growth during the Great Recession. More recently, healthcare spending is up, and NHE predicts that we may be entering a period of faster growth."
Adjusted for inflation, healthcare spending rose 23% from 2007 through 2016, the researchers said.
Brand-name prescriptions, ER visits, and outpatient surgery drove 48% of the per capita spending increase. Frost and Kennedy say these three high-cost growth areas "may be good targets for cost-saving measures."
"Though, we did find that spending grew across all four main categories of health services: inpatient, outpatient, professional, and prescriptions," they said.
The findings also provide more evidence of a fundamental shift by consumers away from inpatient settings in favor of lower-cost outpatient settings.
Per capita out-of-pocket spending on brand-name and generic prescription drugs declined, and researchers pointed to benefit design changes and patterns of service use.
"In the case of brand-name prescriptions, recent spending trends did not correlate with utilization trends," Frost and Kennedy say. "Use of brand prescriptions has been falling each year, while spending has been increasing—suggesting price increases drove spending."
In addition, per capita out-of-pocket spending increased by 43%, driven by outpatient and professional services. The largest increase was seen in spending for ER visits.
Frost and Kennedy conceded some limitations in their study. While the sample data represents more than 25% of the population with employer-sponsored insurance, they said it may not be representative of the larger employer-sponsored insured population.
The study also excludes spending trends for patients with public insurance, and does not track health insurance premiums paid by employers and employees or information on drug rebates and coupons.
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.
KEY TAKEAWAYS
Employer-sponsored insurance claims saw annual average growth rates of 4.1% over the past decade.
Spending growth has accelerated toward pre-recession levels over the past three years.
ER visits, outpatient services and brand-name presciption drugs account for nearly half the spending growth.