Drivers of Health Spending

In order to address sources of health spending growth, they need to be accurately identified.  There are two components to any health spending–the number of services and the unit cost of each service.  A report from Truven Health Analytics examines what is currently driving spending in employment-based health plans.  The years 2006 and 2011 were looked at, covering 8 million and 12 million persons respectively.   (Truven Brief)   Overall spending by employers grew 4.3% annually on a per member per year basis.  Hospital outpatient grew most rapidly at 6.5% and drugs relatively slowly at 2.1% a year.  Musculoskeletal conditions were the costliest and most rapidly growing set of diseases.  Cancer costs also grew rapidly  and was the second largest spending category.  Cardiovascular was the third biggest disease group, but showed little growth.  Partly due to treatment of musculoskeletal conditions, complications of surgery and medical care were occurring more frequently.  Obesity, as usual, was also identified as a spending villain.  Within the drug category, specialty pharmaceuticals are showing strong increases in spending.  Cost per case was a bigger factor in spending growth than prevalence of disease.  One good sign is that there was more use of preventative services.