Rising tide lifts all boats: Same is true for healthcare costs

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Several specific healthcare costs for the privately insured in 2010 increased by almost three times the rate of general inflation, according to a report from the Health Care Cost Institute (HCCI). The per capita spending on inpatient and outpatient facilities, professional procedures and prescription drugs rose 3.3 percent in 2010 for beneficiaries under age 65 with private, employer-sponsored group insurance.

Washington, D.C.-based HCCI determined per capita spending on healthcare services averaged $4,255 in 2010, a 3.3 percent increase from 2009. Per capita expenditures varied, with $8,327 paid for people aged 55 to 64, and $2,123 for people under 18 in 2010. Per capita spending among the youngest cohort–people 18 and under–grew faster than any other age group under age 65.

Overall, health spending among the estimated 156.5 million people with employer-sponsored group insurance increased, rising 2.5 percent to $666.1 billion.

The report, “Health Care Cost and Utilization Report: 2010,” is the first of an ongoing series of reports from HCCI. Using de-identified, HIPAA-compliant data sets from three billion health insurance claims provided by Aetna, Humana and UnitedHealthcare, the researchers studied what influences the use and cost of healthcare services. Findings from the 2010 report reflect the national healthcare spending of more than 33 million privately insured people with employer-sponsored group health insurance.

Higher spending was mostly due to price increases, rather than change in the use of healthcare services, the report found. HCCI data show that this 3.3 percent increase follows spending increases in 2008 (6 percent) and 2009 (5.8 percent). Hospital and ambulatory care facility prices rose by 5.1 and 10.1 percent, respectively, in 2010. Increases in facility prices were offset by decreases in the number of inpatient admissions (-3.3 percent) and use of outpatient facilities (-3.1 percent), the report added.

In fact, overall use of healthcare services declined in 2010, the research asserted. “Usage dropped by more than 5 percent for medical inpatient admissions, emergency room visits, primary care provider office visits and radiology procedures,” the report found. “On average, each insured person filled more than nine prescriptions in 2010. The number of brand name prescriptions dropped by nearly 4 percent, while the number of generic prescriptions increased by 2.5 percent.”

Out-of-pocket per capita spending increased 7.1 percent in 2010 to $689. Cost sharing rates between payors and beneficiaries remained relatively stable, with beneficiaries contributing 16.2 percent of average per capita spending. The average facility price paid for a hospital stay was $14,662 in 2010, a 5.1 percent increase over 2009. The price for an emergency room visit climbed to $1,327 in 2010, an 11 percent hike. The average out-of-pocket price of a hospital stay rose 10.7 percent from $632 in 2009 to $700 in 2010.

“Prescription drug prices grew on 3 percent overall from an average of $80 per prescription in 2009 to $82 in 2010,” the report stated. “However, brand name drug prices increased 13 percent from 2009 to 2010, while generic drug prices decreased by 6.3 percent.”

The overall price of professional procedures that include doctor visits, lab tests, and diagnostic imaging, increased 2.6 percent. Payments for office visits—to both primary care and specialist providers—grew by more than 5 percent.

The 2011 update of the current report will be available in fall 2012. In future reports, HCCI will examine cost and utilization trends in specific areas such as mental health and substance abuse, cancer and diabetes. Future reports from HCCI will include data from Kaiser Permanente.