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HCCI Releases 2017 Health Care Cost and Utilization Report

Per-Person Health Care Spending Grew 4.2% in 2017, Driven Mostly by Prices

Outpatient services had highest spending growth in 2017, increasing 5.1%

WASHINGTON (February 12, 2019) — Average annual health care spending for individuals with employer-sponsored insurance increased to an all-time high of $5,641 in 2017, despite little change in the utilization of services overall, according to the Health Care Cost Institute's annual Health Care Cost and Utilization Report. While overall spending growth slowed in 2017 compared to 2016, the report finds that prices continued to drive rising costs. 

"Health care spending growth exceeded 4 percent for the second consecutive year, outpacing percapita 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 report examines four groups of health care services and dozens of sub-categories. While prices drove spending growth across the board, the role of utilization varied among categories: 

  • Professional services spending accelerated, growing 13 percent between 2013 and 2017. The most rapid rise in spending within this category was for administered drugs, which rose by 45 percent over the report period, despite a 12 percent decline in utilization. In contrast, psychiatry spending grew by 25 percent, driven in part by an uptick in utilization; use of psychiatry services climbed 18 percent between 2013 and 2017. 
  • Inpatient spending grew 10 percent between 2013 and 2017 despite a 5 percent drop in utilization, driven primarily by rising prices for medical and surgical admissions. 
  • Spending, utilization, and prices for inpatient care for mental health and substance use increased. 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. 
  • Per-person spending on outpatient visits and procedures grew more than 5 percent, higher than any other service category. The increase was driven by spending on outpatient surgeries and emergency room visits. While the number of outpatient surgeries declined by 4 percent from 2013 to 2017, price growth drove an overall spending increase of 14 percent over the five years. Prices for emergency room visits rose 24 percent, and usage increased 10 percent. 
  • Utilization of prescription drugs increased 3 percent in 2017, a year-over-year uptick after little change between 2013 and 2016. Continued growth in point-of-sale prices contributed to an overall spending increase of 4.7 percent between 2016 and 2017, and cumulative growth of 29 percent in the five-year period. Drug spending estimates include discounts from wholesale prices but do not reflect offsetting manufacturer rebates provided through separate transactions. 

Health care use and spending differences for certain sub-groups varied considerably: 

  • Non-utilizers. More than 40 percent of 19-25 year olds had no claims for any health care services or prescription drugs in 2017. Just 15.8 percent of those 55-64 had no utilization. 
  • Chronic conditions. Average spending for individuals with one of five chronic conditions reported in the study — 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. Those with two or more chronic conditions had even higher spending, averaging $20,257. 

The report's authors emphasized the insight to be gained from the observed variation. "Diverging trends across several sub-categories of services provide important context for where and to whom these health care services are being delivered," said John Hargraves, senior researcher and a coauthor of the report. 

Jeannie Fuglesten Biniek, senior researcher and co-author of the report, added, "These trends can inform specific efforts and policies to curb health care spending growth." 

Methodology. Since 2011, HCCI has tracked, independently analyzed, and reported health care spending, utilization, and prices each year in its Health Care Cost and Utilization Report, using deidentified claims data of people up to age 65 with employer-sponsored health insurance. HCCI analyzed data from about 4 billion claims of more than 40 million individuals. Claims data come from four of the largest health insurance providers in the U.S. — Aetna, Humana, Kaiser Permanente and UnitedHealthcare — representing about 26 percent of the employer-sponsored insured population. For this year's report utilization and price measures for three of the four service categories (the exception being prescription drugs) were adjusted to account for changes in the mix of services provided in each category, and therefore, facilitate comparisons across years. Further, measures of drug spending reflect discounts negotiated from the wholesale price of drugs but do not include manufacturer rebates that are provided through separate transactions. Thus, drug prices reflect the point-of-sale prices.