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HCCI Report on Out-of-Pocket Spending

By November 6, 2014Commentary

Earlier we previewed the annual Health Care Cost Institute report which described 2013 health spending for commercial (under 65, non-Medicaid) populations.  A second report issued at the same time analyzes out-of-pocket spending trends.   (HCCI Report)  In 2013, 16.4% of all spending in employer-sponsored plans was out-of-pocket, largely in the form of deductibles and copays.  Remember that this is on top of the premium sharing almost all employees have.  Out-of-pocket spending rose 4% in 2013 to $800 per capita.  By category, professional services is the largest component, at 44%, and grew at 5.3% from 2012 to 2013.  Oupatient hospital accounted for 27% of employee cost-sharing and rose at over 8.5%.    Inpatient cost-sharing rose 10.5%, likely because of greater prevalence of deductibles.  Medication cost-sharing actually fell.  Out-of-pocket spending growth was highest in the South and Northeast, followed by the Midwest, while the West had the slowest rate of increase.  Per capita out-of-pocket spending gets higher with age, but older cohorts show slightly higher growth rates than do younger ones, with the exception of young women, see the note below.  While women have higher average out-of-pocket spending, $914 versus $681, men’s is rising faster, at 4.5% versus 3.7%.  Out-of-pocket spending by women ages 19-44 is driven up by pregnancy and childbirth expenses.  Out-of-pocket spending growth is fairly moderate, but is linked to premium-sharing.  Richer benefit designs typically have lower cost-sharing, but higher premiums.  Benefit designs with high cost-sharing have lower premiums, but higher service cost-sharing.  The overall trend has been to high-deductible plans and to greater premium cost-sharing so consumers are getting a double whammy.  While there undoubtedly is some level of inappropriate care in this country, high cost-sharing has to lead to concerns about consumers avoiding services they really need.

Now an interesting little nugget in the report is that young adult women had a zero growth trend on out-of-pocket costs, a phenomenon entirely due to the removal of copays on birth control medicines.  An outstanding vote-buying move by the Administration prior to the 2012 election, but one which made everyone’s premiums go up, because contrary to the headlines, nothing is free.

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