Washington, DC—U.S. health care spending grew at a faster pace than expected in 2011,according to a new report from the Health Care Cost Institute (HCCI). The Health Care Cost andUtilization Report: 2011 provides the first broad look at 2011 health care spending among thosewith employer-sponsored insurance (ESI). HCCI found that average dollars spent on health careservices for that population climbed 4.6 percent in 2011, reaching $4,547 per person. This waswell above the 3.8 percent growth rate observed in 2010 and beyond expected growth for2011.
Consumers spent more of their own dollars on health care in 2011, with out-of-pocket spendinggrowing to $735 per person—a $32 increase from 2010—while costs covered by insurancegrew at nearly the same rate. Spending levels grew fastest for outpatient services, for thoseages 18 and younger, and those in the Northeast region. Spending grew the slowest forprescriptions.
Spending Growth Slowdown Abated
Health care spending growth has been on a downward trajectory. HCCI found spending growthslowed from 5.8 percent in 2009, to 3.8 percent in 2010 for those with employer-sponsoredinsurance. With a sluggish economy, many experts anticipated a modest growth rate for 2011.
"While it's hard to know whether this means spending levels are going to continue rising, itclearly is a signal that we have to pay attention to," said HCCI Governing Board ChairmanMartin Gaynor, PhD, Professor of Economics and Public Policy at Carnegie Mellon University.
"We need to continue studying these data to see whether this acceleration in spending growthis the beginning of an upward trend that will return us to pre-recession levels," he added.
HCCI's report reflects the national health care spending of nearly a 156 million people withcommercial insurance. HCCI estimates are based on the claims of 40 million privately insuredpeople with ESI—an increase of 7 million people from a report released earlier this year. Theclaims held by HCCI account for the health care spending of over 25 percent of all people under65 with ESI. Based on this data, HCCI estimates that total private health insurance spendingreached $709.2 billion, an increase of 4.2 percent from 2010.
Rising Prices Drove Spending Growth in 2011
Prices rose for all major categories of health care—hospital stays, outpatient care, proceduresand prescriptions—outpacing an uptick in the use of many of these services. Prices rose fastestfor outpatient care.
"Prices continue be the main culprit for rising health care costs," said HCCI Executive DirectorDavid Newman. "If we are really going to get health care spending under control, we have tobetter understand why those prices are rising and the implications those increases have for theU.S. health care budget."
Prescription Spending Slowed
Overall health spending was partly offset by a slowdown in spending on prescriptions, whichgrew just 1 percent from 2010 to 2011, rising to $773 per capita.
Slower growth was driven by net changes in prices and use of brand name prescriptions versusgenerics. Although brand name prescription prices rose 17.7 percent to an average of $268 perprescription, use of brand name prescriptions fell nearly 13 percent. The price of generics fell7.2 percent to an average of $33 per prescription, while use rose 3.4 percent.
REPORT HIGHLIGHTS:
- Regional spending gap widening: HCCI analyzed spending in the four major U.S. Census
regions. The Northeast had the highest per capita spending ($4,659) while the West hadthe lowest ($4,358). The gap in spending between the two regions grew, widening from$232 in 2010 to $301 in 2011.
- Spending on children's health care rising fastest: As in 2010, per capita spending onchildren (ages 0-18) grew much faster than spending on other age groups. In 2011, thegrowth rate of spending on children increased 2.1 percentage points to 7.7 percent—more than twice the rate of the spending for those aged 19-44 and 55-64.
- Cost sharing between patients and payers remains stable: Spending on health care wassplit between consumers and insurance companies in much the same way as previousyears, with insurers paying for 83.8 percent of total expenditures and insured enrolleescontributing 16.2 percent. Payers contributed $3,812 per person in 2011.
- Use of outpatient and health care services up: In 2011 compared to 2010, people withESI used more outpatient services and had more procedures performed. Visits to theemergency room (ER) increased 3.7 percent. However, they had fewer hospitals staysand filled prescriptions.
The Health Care Cost and Utilization Report: 2011, as well as two issue briefs, will be availableon the HCCI website on September 25, 2012, at: http://www.healthcostinstitute.org/2011report
HCCI's analysis is based on de-identified Health Insurance Portability and Accountability Act(HIPAA) compliant data sets from nearly 6 billion health insurance claims provided by Aetna,Humana, and UnitedHealthcare, three of the nation's largest health plans. HCCI does not reporton premiums. Future reports from HCCI will include data from Kaiser Permanente. All pricesand spending reporting by HCCI are current or nominal dollars.
Later this year, HCCI will be releasing a report examining health care spending trends from2007-2011. Several independent researchers are now working with HCCI's data and areundertaking studies evaluating factors that influence geographic variation in health carespending and utilization of services, and examining the effects of aging on health spending.
Source: Burness Communications