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HCCI 2017 Spending Report

By February 19, 2019Commentary

The Health Care Cost Institute collects data from several large health plan companies and uses the information to create reports on trends in employer-sponsored health coverage for persons under age 65.  The annual report on health spending for 2017 is now available.   (HCCI Report)   Spending per person in this group rose 4.2%, to $5641.  In the previous five years, including 2017, spending increased an average of 3.9% per year.  Utilization in 2017 grew only one-half of a percent and for the last five years utilization has actually declined .2%.  That’s right, health plans are doing a great job of controlling utilization.  And on the flip side, that means that price increases by providers and product companies account for almost all of the rise in spending, with prices going up by 3.6% in 2017, although price growth has ameliorated in the last couple of years.  Among the major categories of service, professional services was 33.6% of all spending, inpatient care was 19.5%, hospital outpatient care was 28% and drugs were about 19%.  Inpatient spending grew by 2.4%, outpatient hospital had the fastest rise, at 5.1%, drug spending rose 4.7%, a decline from prior years, and professional services grew 4.2%.

And the trend of price causing spending growth is apparent in the categories as well, with utilization declining .6% for inpatient services, while prices rose 3%; utilization declined .6% for hospital outpatient, while prices grew 5.7%; for professional services there was a .6% rise in utilization coupled with a 3.5% increase in prices and drug utilization grew fastest, by 3.3%, while prices rose a mere 1.4%.  Drug price moderation is almost certainly due solely to generic drug use.  Spending varies significantly by age.  Children under 18 averaged $3170 per person in 2017, people aged 26 to 44 averaged $4871 and those 55 to 64 averaged $10,476.  But spending on younger age groups is growing somewhat faster.  Now here is a very interesting stat, 40% of people 19 to 25 had no health care utilization (really need that insurance don’t you) as did 30% of those 26 to 44 and even 21% of those 45 to 54.  And as other studies show, if you have chronic conditions, you are costing more, the average was $8921 for people with even one and $20,257 for those with two or more such conditions.  In a little good news for employees, out-of-pocket spending rose only 2.6%, so more of the increase in spending was being borne by employers.  In not such good news, mental health and substance abuse service use was growing rapidly.  Another notable subcategory was physician administered drugs which had the fastest rate of growth, due to increased utilization but especially to price increases.

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