Health care spending hits record high despite flat rates of utilization
The average annual health care spending for individuals with employer-sponsored plans reached an all-time high of $5,641 in 2017.
Health care spending in the U.S. continues to increase, a new study from the Health Care Cost Institute (HCCI) finds. Overall, per-person spending increased 4.2 percent in 2017, the report found. The average annual health care spending for individuals with employer-sponsored plans reached an all-time high of $5,641 for 2017.
“Health care spending growth exceeded 4 percent for the second consecutive year, outpacing per capita GDP growth,” said Niall Brennan, president and CEO of HCCI. “And for the most part, Americans aren’t using more health care services, which means we’re essentially paying more and more for the same amount of health care.”
The study found that while rising prices across the board drive the overall cost increase, utilization varies in different areas.
Related: What areas of health care spending increased the most last year?
Outpatient spending accounted for the biggest yearly increase, at more than five percent. These higher costs were driven by spending on outpatient surgeries and emergency room visits. Utilization for outpatient surgery was down, the report said, but ER visits increased in 2017.
In addition, spending and utilization in the area of inpatient care for mental health and substance abuse was up in 2017. “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 sub-category,” the HCCI report said.
The area of prescription drugs was another example of price increases, rather than utilization, being the larger factor for increased spending. The study said utilization of prescription drugs increased 3 percent in 2017, but growth in point-of-sale prices contributed to an overall spending increase of 4.7 percent during the same time period. And 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 noted that utilization varies widely between different sub-groups of patients. For example, it found that more than 40 percent of 19-to-25 year olds had no claims for health care services or prescription drugs in 2017. By comparison, just 15.8 percent of Americans 55-64 had no utilization.
In another area, average spending for individuals with chronic conditions, which included hypertension, asthma, diabetes, attention deficit/hyperactivity disorder, and congestive heart failure, was $8,921 in 2017, compared to $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 said.
The HCCI findings differ slightly with official government figures from 2017— a report from the Centers of Medicare and Medicaid (CMS) found that health spending in the U.S. grew at a slightly lower rate of 3.9 percent. But the CMS report concurred with the HCCI findings in seeing a slower rate of utilization and higher prices in the health care system. Medical price growth, the CMS report found, increased 1.6 percent overall in 2017.
The report comes at a time when consolidation in the health care industry is still going strong, with 2017 being a record year for mergers and acquisitions. Some analysts say that consolidation is increasing prices for patients in the U.S. 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.
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