Utilization and Cost Trends Over a Long Period

By July 17, 2017Commentary

In the context of ongoing concern about the level of health spending in the US, it is useful to conduct long-term studies to identify potential changes in the nature of the spending.  Researchers have created something called the “Ecology of Medical Care” which looks at who is using services, how many services are used and spending on those services, using a constant dollar approach.  Using data from the 1996-97 and 2011-2012 Medical Expenditure Panel Survey, the authors compared trends in this “ecology”.     (AFM Article)  The utilization and spending were broken down by a variety of categories, such as inpatient, drugs, dental, vision, etc.  There was no difference between the two time periods in the proportion of individuals using a service or the number of services per population unit for total visits, outpatient visits, physician visits, specialty physician visits, ER visits or inpatient hospitalizations.  However, expenditures increased for most of these categories, with inpatient being an exception.  This would suggest that unit price is the cause of the expenditure increase.  The same proportion of people had a primary care visit, but there were fewer visits per unit of population, although spending was the same, again suggesting price growth.  The proportion of people using prescription medications was relatively constant, but use per person was up, and spending was up significantly, accounting for over 40% of all spending growth.  The total spending increase from the early period to the latter one was 47%, from $246 per individual per month to $362.  While there are issues in use of survey data, the MEPS data has been around for a long time and involves relatively large numbers of people and the methodology has been extensively evaluated and adjusted to account for known problems.  The results of this study suggest that we are not seeing runaway utilization, but rather they support the idea that unit price growth is responsible for most of the change in our health spending, particularly in regard to prescription drugs.  So lets focus on how to reduce unit prices instead of wailing about unnecessary and inappropriate care and waste in the system.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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