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2018 Health Care Spending Up Due to Higher Prices

2018 uptick in utilization first seen in years, but impact dwarfed by price increases

MONDAY, March 9, 2020 (HealthDay News) — Average employer-sponsored insurance spending rose to $5,892 per person in 2018, according to the Health Care Cost Institute annual Health Care Cost and Utilization Report.

To assess the trends within four categories of service (inpatient admissions; outpatient visits and procedures; professional services; and prescription drugs), the authors of the report used deidentified claims data for 160 million U.S. individuals (<65 years) with employer-sponsored health insurance provided by Aetna, Humana, Kaiser Permanente, and UnitedHealthcare. The analysis included 2.5 billion medical claims. Utilization and price measures for three of the four service categories (inpatient services, outpatient services, and professional services) were adjusted to account for changes in the mix of services provided in each category.

The researchers found that rising prices were the primary driver of spending growth, despite increased utilization. Outpatient visits and procedures saw the highest 2018 spending increase (5.5 percent) and a 16 percent increase from 2014 to 2018. Spending for emergency department visits increased 32 percent from 2014 to 2018, while spending on observation stays increased 29 percent. Overall, per-person spending on inpatient admissions rose 11.4 percent between 2014 and 2018, but the 2.0 percent price increase in 2018 was lower than the near 4 percent annual increases seen from 2014 to 2017. Spending on professional services increased 16 percent during the five-year period. Specifically, psychiatry saw marked spending growth of 43 percent from 2014 to 2018, driven mostly by increased utilization.

“Higher prices for medical services continue to drive most spending increases, but in 2018 we also saw an uptick in utilization for the first time in several years,” Niall Brennan, president and CEO of the Health Care Cost Institute, said in a statement. “If these price and utilization trends continue, we expect spending growth to stay on an upward trajectory in the coming years.”

Health Care Cost and Utilization Report

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