A Multi-Payer Analysis of Health Care Spending in North Carolina

Our population includes data on 6.3 million people annually

To begin understanding health care spending in North Carolina, we’ll start by breaking down the study sample to get a sense of who the data represent across the state. Our study population consisted of approximately 6.3 million people annually out of the state’s population of approximately 10.2 million. The 4 million people not included in this analysis are those who are uninsured, those insured through the individual market, those enrolled in Employer-Sponsored Insurance (ESI) plans administered by other issuers, and those enrolled in Tricare or receiving care delivered through the Veterans Administration. Since our study period spanned 2016 and 2017, we analyzed data from our study population over the two-year period.

Four populations make up our study, characterized by the “payer” of insurance claims — Medicare Fee-For-Service (FFS), Medicare Advantage, Employer-Sponsored Insurance (ESI), and North Carolina Medicaid .

Employer-Sponsored Insurance accounted for the most people in the study, representing 43.1% of the study population.Medicaid accounted for 30.2%, followed by Medicare Fee-For-Service, accounting for 18.4%. Finally, Medicare Advantage accounted for 8.4% of the study population.

The Medicare Fee-For-Service population includes those enrolled in the traditional federal Medicare program, including those 65 or older, those under 65 with certain disabilities, and those with end-stage renal disease.

The Medicare Advantage population includes those eligible for Medicare Fee-For-Service who choose to enroll in a private health insurance plan overseen by the federal Medicare program.

The Employer-Sponsored Insurance population includes employees and family members who receive health insurance coverage through their employer.

The North Carolina Medicaid population includes those eligible and enrolled in the state-administered Medicaid program. This includes low-income adults, children, pregnant women and women receiving postpartum care, refugees, and people with disabilities.

We report data on health care spending overall and by age groups and gender. The age groups include children (0-17 years old), non-elderly adults (18-64 years old), and elderly adults (65+ years old). For the Employer-Sponsored Insurance population, elderly adults were excluded. The Medicare Fee-For-Service and Medicare Advantage populations in the sample included no children.

All four populations had a slightly higher proportion of females than males. For example, Medicaid had the largest gender difference, with 57.7% of its population being female. This is driven by eligibility criteria for NC Medicaid, which includes coverage for low-income women during pregnancy and 60 days postpartum.

The populations also varied by their age group composition. Over 58% of the Medicaid population were children, compared to under 20% for Employer-Sponsored Insurance. Medicaid eligibility rules cover many children in low-income households, but does not include non-disabled childless adults and other populations. The Medicare Advantage population in this study skewed older than the Medicare Fee-For-Service population, with 85.6% of the Medicare Advantage population over 65 years old compared to 75.6% in the Medicare Fee-For-Service population. The difference is driven by younger people with disabilities enrolling more often in Medicare Fee-For-Service than Medicare Advantage.

Total spending among the study population was almost $100 billion over the two-year study period

Now that we understand who makes up the study population, we can begin to explore health care spending. Total health care spending for our study population was almost fifty billion dollars per year, or almost one hundred billion dollars total ($98.3 billion). Each population contributed a slightly different share of spending to the total.

Spending by population

The Medicare Fee-For-Service and Employer-Sponsored Insurance populations had roughly the same share of the total spending, accounting for 33.9% and 32.4%, respectively. The Medicaid population accounted for 21.2% of the spending, with the Medicare Advantage population accounting for 12.5%.

Spending by service category

We also wanted to understand how the total spending was distributed among kinds and settings of health care services, or service categories.

We classified spending separately into four broad categories: Inpatient, Outpatient, Professional (Clinician) services, and Prescription drugs .

Breaking down the study population’s total spending by service categories, inpatient services accounted for 27.8% of total spending. Outpatient and professional services both accounted for 27.0%, while prescription drugs accounted for 18.3% of spending.

Inpatient applies to services provided to patients who stay at a health care facility (like a hospital or a nursing home) overnight for treatment. It does not include overnight stays for observation only.

Outpatient applies to services provided to patients by health care facilities not requiring an overnight stay or hospitalization. For example, an emergency room (ER) visit, an outpatient surgery, or an observation-only stay.

Professional applies services provided to patients by a health care professional, like at an office visit for preventive services or chronic disease monitoring.

Prescription drug spending includes payments made for drugs dispensed by retail and mail-order pharmacies. It does not reflect manufacturer rebates.