Annual per-person spending on health care has developed up to $5892 between 2014 and 2018, according to the 2018 Health Care Cost and Utilization Report published by the Health Care Cost Institute.
Health care spending expanded by 4.4% in 2018, somewhat more than the 4.2% improvement in 2017, and the third following year with a rise more famous than 4%.
Jean Biniek, Ph.D., a senior investigator with the Health Care Cost Institute, stated she was shocked that a meaningful portion of the growth was attributable to average cost developments.
“We used data from 2.5 billion medical and pharmacy claims from 4 of the largest national health insurers to estimate costs, prices, and utilization among people in the US with health insurance coverage through an employer,” Biniek explained in an email. “The most striking finding was that nearly 3-quarters of the growth in inflation-adjusted spending was due to increases in the average prices for health care services.”
The Research In-Depth
Three other factors performed essential roles in the development: growth in service costs, changes in the number of services used, and an aging society with employer-sponsored insurance.
The researchers split the report into four sections: inpatient charges, outpatient appointments and plans, expert services, and prescription drugs. In 2018, per-person spending rose $87 for facility payments for outpatient visits and programs, $86 for professional services, $24 for facility fees for inpatient admissions, and $50 for medicine drugs.
Utilization also developed for all of these classes. In 2018, patients utilized inpatient charges 0.2% more, outpatient visits and methods 1.6% more, professional services 3.1% more, and prescription medications 1.1% more than in past years.
On the whole, average prices rose by 2.6% in 2018. While the authors noted that that is the most reasonable rate of growth between 2014 and 2018, the steady year-over-year increases during that period happened at 15% higher prices in 2018 than in 2014.
Eric Levin, CEO of Scripta Insights, stated that understanding the drivers behind health care prices is vital to making educated decisions.
“If you take value into account because you know the cost, then you can start to make educated systems,” he stated in an interview with Pharmacy Times.
In 2018, prescription painkillers added to $1118—or 19%—of the average per-person health care spending. The authors recorded that the calculation for prescription medication cost involved arranged discounts from wholesale or list prices, but did not include manufacturer rebates administered through separate events.
The lack of public data on rebates meant the researchers had to estimate their effect on prices. To isolate the potential impact of discounts, the authors separated medical and gross prescription drug spend. Medical spend accounted for between 60% and 80% of the increase in total spending, and excluding blatant prescription drug spend reduced the average annual growth from 4.3% to 3.9%.
The $1118 spend on prescription drugs per-person on average in 2018 includes $871 on branded prescriptions and $236 on generics. Compared with 2014, the authors noted that spending was 29% higher due to increases in expenditures for the same drugs, as well as increases in spending for newly approved medications.
The largest subcategory of prescription drug spend was hormones, accounting for 20%, followed by central nervous system drugs (14%) and rheumatoid arthritis medications (13%).
The average point-of-sale price for prescription drugs increased by 21% between 2014 and 2018 but slowed considerably over the study period. The authors partially attached that to newly available generic medications for commonly used medications. For example, they noted that the average point-of-sale price for cardiovascular prescriptions declined 39% between 2014 and 2108, corresponding with higher availability and use of generics.
Utilization of prescription drugs—measured as the number of filled days per person—remained steady from 2014 to 2016, and rose slightly between 2016 and 2018. The cumulative increase was 4% over the 5-year research period.
“We need to understand better the drivers of price developments, especially rises in prices for the same healing service or prescription drug,” Levin said.
Levin reiterated how vital learning is for professionals looking to understand and predict trends in the healthcare industry. For example, when evaluating savings events for insurance providers, Levin said he very frequently sees 46% savings events. Understanding the calculations leading to this could be vital in building savings, and sharing that information with health care providers would also be a significant step.
While there will always be more confusion and numbers to solve in the health care system, Levin said, changing information availability could go a long way. The resolution must include everyone, he said, including physicians, buyers, sellers, and customers.
To Sum Up
Biniek assumed that because almost half of the people in the US receive health coverage through their employer, interpreting these data is critical to getting the drivers behind systemwide growth in health care spending.