Report: Healthcare Spending For Employers Outpaced Economy’s Growth

F.J. Thomas

Washington, DC ( – A new report utilizing claims data from Aetna, Humana, Kaiser Permanente, and United Healthcare indicates that healthcare spending is growing faster than the economy. The 2018 Health Care Cost and Utilization Report released by non-profit analytical company Health Care Cost Institute (HCCI), analyzed data from 2014 to 2018. The claims data included 2.5 billion medical and prescription drug claims from patients under the age of 65 that were covered by an employer-sponsored insurance. The claims information was derived from approximately 40 million patients.

From 2014 to 2018, healthcare spending per person increased at an annual rate of 4.3 percent from $4,978 to $5,892, or an overall increase of 18.4 percent. The 4.3 annual increase was higher than the average growth in per-capita Gross Domestic Product, which was only 3.4 percent during the same time period. When broken out per year, however, per-capita GDP was slightly higher from 2017 to 2018.

The report suggested that higher charges were at least a partial contributor to the increase in healthcare costs. Overall average healthcare pricing increased 2.6 percent in 2018. Although the 2.6 percent increase is the lowest increase during the time period, the overall increase in 2018 is 15 percent higher than 2014 totals. The data found that the increase in provider charges accounted for three-quarters of the cumulative increase, after taking inflation into account.

A surge in the quantity of services billed, as well as aging of employees and a higher number of covered females were cited as additional causes for the rise in costs. Higher quantity of services accounted for 21 percent of the total increase, while aging and ratio of females accounted for 4 percent.

The age category with the highest percentage of employer-sponsored coverage was 26 to 44, totaling 29 percent of those covered. Ages 45 to 54 made up the second highest category at 18 percent, closely followed by 55 to 64 at 17 percent. Cost per person was highest for those persons aged 55 to 64. For those under the age of 18, children under the age of 3 had the highest expenses. Teenage males aged 14 to 18 had higher expenses than males aged 19 to 25.

Age was also a factor when comparing males and females. When comparing ages 26 to 44, per person spending for women totaled $6,382, while men of the same age totaled a little more than half, at $3,549. However, in the older demographic the spending leveled out. The per person cost for women aged 55 to 64 was $10,688, and the cost for men was slightly higher at $10,891.

In 2018, 20 percent of those covered were diagnosed with at least one of the following conditions – hypertension, asthma, diabetes, attention-deficit/hyperactivity disorder (ADHD), and congestive heart failure (CHF). An additional 5.8 percent had two or more of these conditions. Hypertension was the most common diagnosis.

Spending for persons with these diagnoses was significantly higher, at $9,187. Average spending for persons with two or more conditions was $20,762. The average spending for those with no chronic conditions was $3,755.
In 2018, the average per person cost for drugs was $1,118, with $871 spent on brand name prescriptions, and $236 spent on generic drugs. The total is 29 percent higher than costs in 2014.

Gender had a bearing on pharmaceutical costs as well as the data showed that hormone prescriptions accounted for 20 percent of the total drug costs. Central nervous system (CNS) prescriptions accounted for 14 percent of the total costs, and rheumatoid arthritis prescriptions accounted for 13 percent. The per person cost for hormone prescriptions in 2018 increased 48 percent over 2014 costs. The rheumatoid arthritis drug costs for 2018 rose cumulatively by 130 percent. The cost for CNS drugs dropped by 11 percent. The totals, however, did not account for any potential pharmaceutical rebates, only pharmacy claims data.
Drug pricing itself had an impact on the increase in costs. Drugs administered by a provider nearly doubled from an average price of $470 in 2014 to $813 in 2018, accounting for the overall largest increase in average pricing. When subcategorized, anesthesia made up the highest increase in 2014 at an average price of $737 and the second highest in 2018 at $755.

Professional services costs increased cumulatively 16 percent from 2014 to 2018. Office visits made up 21 percent of costs, followed by surgery at 15 percent, and administered drugs at 14 percent. Office visits increased by $62. Psychiatric services made up 3 percent of total costs, but rose $19 which was a 7 percent increase.

The full report complete with a breakdown by type of service and utilization can be viewed on the HCCI website.

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