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Why is Health Care Spending Continuing to Increase?

Posted by Devin Wood on March 7, 2020

A new report on health care spending trends reveals that in 2018, health care prices continued to rise for American consumers. However, along with a decrease in the rate of growth, there was an increase in utilization. 

The report, conducted by Health Care Cost Institute (HCCI) was able to highlight some of the main causes for the continued growth in employer health care spending.

 

1. The population with employer-sponsored insurance got slightly older and more female

This particular instance accounted for just over 4 percent ($27) of the growth above inflation. 

Health care spending varies by age and gender. While per-person spending grew to $5,892 in 2018, spending for women between 26 to 44 was $6,382, while men in this age group had an average per-person spending of $3,549 in 2018. 

2. Cost increases were a larger factor in spending growth than utilization

Between 2014 and 2018, utilization grew 3.1 percent, while prices increased 15.0 percent. 

However, utilization of psychiatry services increased 32 percent, the largest growth in utilization of any subcategory of service. This, combined with a moderate price growth, drove a 43 percent increase in spending.

3. Mental health and substance abuse saw a significant increase in spending

Per-person spending on mental health admissions rose a cumulative $8 (33 percent). Spending on substance use admissions increased $8 (60 percent) between 2014 and 2018. 

On average, patients paid almost $100 more out of pocket for mental health admissions in 2018 compared to 2014. 

4. Between 2017 and 2018, spending per person on outpatient visits and procedures grew faster than any other service category

Ambulances had the highest average price for outpatient services in each year, increasing from $661 in 2014 to $737 in 2017 before falling to $696 in 2018. 

5. Among inpatient services, radiology procedures accounted for the highest average out-of-pocket cost in each year, rising from $91 in 2014 to $119 in 2018 per procedure. 

6. Spending on both administered drug and prescription drugs was driven by price increases

The average price of administered drugs increased 73 percent from 2014 to 2018, driven almost entirely by growth in average prices. 

Per-person spending on prescription drugs totaled $1,118 in 2018, including $871 on brand prescriptions and $236 on generics, a 29 percent increase over 2014. 

 

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Original article written by: Scott Wooldridge 

 

 

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Topics: Medliminal, healthcare, Inflated prices, Healthcare pricing, Health care system, utilization, Costs, Consumer, 2020

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