Healthcare spending rose 44% over last decade

Healthcare spending has risen rapidly over the last decade, jumping 44 percent per person across all major healthcare categories, according to a new study by the Health Care Cost Institute.

In 2007, spending was $3,752 per person with employer-sponsored insurance. In 2016, that cost was $5,394, the study, published in Health Affairs, found.

“The past decade has been a transformational time in U.S. healthcare market with policy changes and innovation disrupting practice models and standards of care,” Niall Brennan, MPP, president and CEO of HCCI 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.”

Spending growth rates slowed in the first years of the recession after 2009 but increased from 2014 to 2016. More than half of Americans with health insurance were covered by an employer-sponsored insurance plan in 2016, with spending by private insurance plans topping $1.12 trillion that year—far above the $672 billion spent in Medicare.

Nearly half of spending increase—48 percent—was driven by brand-name prescriptions, emergency department visits and outpatient surgery, with prescriptions accounting for the largest dollar increase.

Outpatient care spending rose while spending on inpatient medical and surgical admissions dropped over the study period, “potentially reflecting the continuing shift in hospital care from inpatient to outpatient settings.”

Notably, per capita out-of-pocket spending increased 43 percent, with emergency department visits, outpatient and professional services spending leading the growth. Out-of-pocket spending on brand-name and generic prescription drugs dropped, likely reflecting benefit designs changes and patterns of service use, the study concluded.

“Healthcare expenditures are projected to continue to rise over the next decade, but without meaningful research on the healthcare utilization and spending trends for people with employer-sponsored health insurance—the single largest block of insured people in the country, it will be difficult to develop appropriate and effective policies,” said Brennan. “There is a need for more research on the healthcare trends in this population to understand the complex systems affecting the overall rising cost of U.S. healthcare.”

The study looked at data from HCCI’s private health insurance claims data for its analysis, which includes claims from Aetna, Humana and UnitedHealthcare for the years 2007 to 2016 as well as claims from Kaiser Permanente from 2012 to 2016.