Employer-sponsored health insurance still covers the most people in the United States, although government programs account for more of total spending. The Health Care Cost Institute uses data on over 40 million people covered by these employer plans in 2018 to analyze spending and spending trends since 2014. (HCCI Report) Spending per person was $5892 in 2018, and averaged annual growth of 4.3% over the period, higher than average annual GDP growth, although from 2017 to 2018 the rate of spending increase was slightly below GDP growth, which is very good news if sustained. Interestingly, because the data used does not include drug spending net of rebates, it tended to overstate spending growth. Using fairly good estimates of the size of those rebates would drop annualized spending increases from 2014 to 2018 to 3.8%. Average per person out-of-pocket spending grew to $907 but over the period out-of-pocket spending rose more slowly than total spending. Prices accounted for around 75% of all spending growth and represented 2.6 percentage points of the total rise of 4.4% in 2018 in total spending (not per person). Since 2014 prices have risen 15%. Utilization increases accounted for the remaining 1.8 percentage points of the spending growth in 2018, which was an uptick from earlier years. If utilization begins to increase more sharply again, that will be a negative for controlling spending. But the economy is very strong and utilization tends to track wider economic trends.
Of the total increase in per person spending of 18.3% from 2014 to 2018, general inflation contributed about a third. After taking general inflation into account, health care specific price increases represented around 75%, utilization 21% and age/sex mix 4%. Looking at spending by category, physician and other professional services were 34% in 2018, inpatient hospital was 19%, outpatient hospital was 28% and drugs were 19%. In the five years from 2014 to 2018, prescription drugs showed the highest growth, at 25.8% and inpatient the lowest at 11.4%. Price was a more important factor than utilization in growth rates for all categories. For example, drug prices rose 20.6% while utilization increased 4.3%. Professional services had the highest utilization increase, 5.1%, while price increases over the period were the lowest, 10.7%. Inpatient service use actually declined, by 2.3%. Hospital outpatient prices also rose relatively rapidly at 17.3%. As you might expect, per person average spending generally rises with age. There is little gender difference except for the effect of pregnancy and childbirth in younger women. Number of chronic conditions contributes greatly to spending. People who had no chronic conditions averaged spending of $3755, those with one chronic condition, $9187 and those with two or more, $20762. And one final note, shame on UnitedHealth Group for pulling its data from this very important work and a tip of the hat to Blue Health Intelligence for stepping up to fill the gap with information from most Blues plans.