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Analysis

Rising Prices Lead to All-Time High Healthcare Spending

By Jack O'Brien  
   February 12, 2019

Americans are paying more for the same amount of healthcare, according to a new report from HCCI.

Healthcare spending on average totalled $5,641 for individuals with an employer-sponsored health plan in 2017, according to a new study from the Health Care Cost Institute released Tuesday.

Even though overall spending slowed from 2016 to 2017, prices continue to be a factor as the average cost of healthcare for individuals hit an all-time high.

Healthcare spending per person in 2017 increased 4.2% year-over-year, while the overall utilization of healthcare services only grew by 0.2%.

The phenomenon of Americans paying more for less or similar levels of care utilization has largely been due to average prices increasing, totalling a 17.1% rise from 2013 to 2017, according to the study. 

C-suite perspective:

“Health care spending growth exceeded 4 percent for the second consecutive year, outpacing percapita GDP growth,” Niall Brennan, CEO of HCCI, said in a statement. “And for the most part, Americans aren't using more health care services, which means we’re essentially paying more and more for the same amount of health care.” 

Related: Medicare, Medicaid Enrollment Growing Faster Than Private Coverage

From 2013 to 2017, the healthcare utilization rate grew by a mere 0.5%, which the study attributed to increases in 2016 and 2017 offsetting decreases between 2013 and 2015.

Inpatient admissions and outpatient visits declined over the same period of time, while professional services and the number of filled prescription days remained relatively unchanged.

$5,641 per-person spending breakdown:

  • $1,898 for professional procedures
  • $1,580 for outpatient visits and procedures
  • $1,097 for inpatient admissions
  • $1,065 for prescription drugs

From 2013 to 2017, the total annual per-person spending rose 16.7%, leading to an average annual growth rate of 3.9% that well exceeded the average annual per-capita GDP growth. 

Over the same five year period, the growth rate for average annual healthcare spending actually slowed from 4.8% to 3.6%, which the study attributed to "a slowing in the year-over-year changes in average point-of-sale prescription drug prices."

Per-person spending on prescription drugs increased at 4.7% in 2017, the lowest rate in the five year period of the study.

Meanwhile, out-of-pocket spending increased 2.6% per-person in 2017, but ultimately comprised a smaller share of total spending.

Spending comparisons by sub-groups:

  • 40% of individuals between 19 to 25-years-old did not have claims for services or prescription drugs in 2017.
  • 16% of individuals between 55 to 64-years-old did not have claims.
  • $8,921: average spending for individuals with a chronic condition.
  • $20,257: average spending for individuals with multiple chronic conditions.
  • $3,603: average for individuals without a chronic condition.

“These trends can inform specific efforts and policies to curb health care spending growth.”

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

Healthcare spending per person, largely driven by rising prices, increased 4.2% in 2017.

Out-of-pocket spending increased 2.6% per-person, but comprised a smaller share of total spending.

Average spending for individuals with multiple chronic conditions was more than five times as much as for those without a chronic condition.


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