Dive Brief:
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Healthcare spending for employer-sponsored insurance increased by 44% over the past decade, the Health Care Cost Institute estimated in a new report published Wednesday in Health Affairs.
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Spending increased from $3,752 per person in 2007 to $5,394 per person in 2016, according to the report.
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HHCI said healthcare spending slowed during the recession, but legislative and policy changes accelerated spending in 2015 and 2016 and spurred growth rates closer to pre-recession levels.
Dive Insight:
Healthcare expenditures are expected to grow to nearly 20% of U.S. gross domestic product in a decade. With more than half of Americans receiving health insurance through an employer, private plan spending will account for about 30% of that amount.
HCCI said this is why it's critical to focus on employer-sponsored insurance, which usually receives less attention than other payers like Medicare and Medicaid.
"Continued tracking of trends and a better understanding of the factors contributing to growth will, we hope, lead to the most appropriate and effective policy responses," according to the report.
HCCI analyzed private employer-sponsored insurance claims from 2007 to 2016, which accounted for about 40 million people. The annual average growth rate was 4.1% during the period, including a high of 6.3% in 2009 to a low of 2.6% in 2014. The growth rate was 4.4% in 2015 and 2016.
"The past decade has been a transformational time in the U.S. healthcare market with policy changes and innovation disrupting practice models and standards of care," Niall Brennan, HCCI's CEO and one of the study's co-authors, said in a statement. "However, what is remarkable is that even within these dramatic changes, the share of spending across service areas has remained fairly consistent."
The researchers found that brand-name prescriptions, emergency department visits and outpatient surgery drove 48% of the per capita spending increase. Per capita spending for brand-name prescriptions had the largest dollar increase in per capita terms, but its share of spending increased by only 1%.
Not surprisingly, outpatient care spending increased while inpatient medical and surgical admissions declined.
Meanwhile, patients are facing more costs. Per capita out-of-pocket spending jumped by 43%. HCCI said out-of-pocket spending burden shifted from prescriptions to medical services, specifically outpatient and professional services. The largest out-of-pocket increase was for ED visits.
Per capita out-of-pocket spending dropped on brand-name and generic prescription drugs. HCCI said this is likely because of benefit design changes and patterns of service use.
Brennan said healthcare expenditures will likely continue to increase in the coming decade. He added that more research is needed on employer-sponsored health insurance so policymakers and stakeholders can "develop appropriate and effective policies."
HCCI's health plan spending report in some ways mirrors the recent Mercer's National Survey of Employer-sponsored Health Plans, which looked at payer costs. That report found employer-sponsored health insurance cost growth slowed to about 3% annually since 2012 after a decade of 6% or more yearly increases before the recession. Mercer pointed to multiple reasons for the slow down, including the Affordable Care Act’s excise tax on high-cost plans, cost-shifting and healthcare consumerism.
The Mercer report predicted additional costs in the coming years as medical advances, technology, high utilization, an aging population and more insured Americans will increase costs for employer-sponsored plans. In response, employers are expected to implement other cost-saving strategies, including monitoring high-cost claimants, better managing cost for specialty pharmacy and focusing on creating a culture of health.