Healthcare Spending Hits Record High Despite Flat Rates of Utilization

Healthcare spending in the United States continues to increase, a new study from the Health Care Cost Institute (HCCI) finds. Overall, per-person spending increased 4.2 percent in 2017, according to the report. The average annual healthcare spending for individuals with employer-sponsored plans reached an all-time high of $5,641 for 2017.

“Healthcare spending growth exceeded 4 percent for the second consecutive year, outpacing per capita GDP growth,” says Niall Brennan, president and CEO of HCCI. “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.”

The study found that while rising prices across the board are driving the overall cost increase, utilization varies in different areas. Outpatient spending accounted for the biggest yearly increase, at more than 5 percent. These higher costs were driven by spending on outpatient surgeries and emergency room visits. Utilization for outpatient surgery was down, according to the report, but ER visits increased in 2017.

Both spending and utilization were up in 2017 for inpatient care for mental health and substance abuse. “A steady rise in substance use admissions, which increased 18 percent between 2013 and 2017, along with a 39 percent rise in prices, drove the spending for this subcategory,” the HCCI report says.

In prescription drugs, too, increases in prices and utilization are driving spending growth. The study says utilization of prescription drugs increased 3 percent in 2017, while growth in point-of-sale prices contributed to an overall spending increase of 4.7 percent. For drugs administered in clinical settings, costs rose by 45 percent between 2013 and 2017, despite a 12 percent decline in utilization.

The report also notes that utilization varies widely between different subgroups of patients. For example, it finds that more than 40 percent of 19- to 25-year-olds had no claims for healthcare services or prescription drugs in 2017. By comparison, just 15.8 percent of Americans 55 to 64 had no utilization.

In another area, average spending for individuals with chronic conditions, which include hypertension, asthma, diabetes, attention deficit/hyperactivity disorder (ADHD), and congestive heart failure, was $8,921 in 2017, compared with $3,603 for people with none of these conditions. Individuals with two or more chronic conditions had even higher spending, averaging $20,257, the report says.

The HCCI findings differ slightly from official government figures from 2017—a report from the Centers of Medicare and Medicaid (CMS) that found health spending in the U.S. grew at a slightly lower rate, 3.9 percent. But the CMS report concurred with the HCCI findings in seeing a slower rate of utilization and higher prices in the healthcare system. Medical price growth, the CMS report found, increased 1.6 percent overall in 2017.

The HCCI report comes at a time when consolidation in the healthcare industry is going strong; 2017 was a record year for mergers and acquisitions. Some analysts say consolidation is increasing prices for patients in the United States. Last summer, the National Council on Compensation Insurance released a report that found mergers and acquisitions among hospitals increase the average price of hospital services by 6 percent to 8 percent.

From: BenefitsPro