The average amount spent on medical care for Americans with employer-based health insurance reached an all-time high of $5,892 per person in 2018, the latest data show. This was an 18 percent increase ($914) from five years earlier, according to a new report from the Health Care Cost Institute (HCCI). Total spending per person includes shares paid by both the insured and the insurer.
Services and Rx drive increase
Higher prices for medical services were the primary driver for spending growth over the five-year study period. Fees for inpatient care, outpatient care, professional services and prescription drugs jumped between 2014 and 2018, adding $453 after adjusting for inflation to per-person spending. A slight uptick in health care utilization (that is, individuals tapping more health services) also contributed to spending growth, the report found.
How do these findings affect those with job-based insurance? For starters, the increasing cost of health care is one that is becoming more “burdensome” on individuals, says Paul Ginsburg, director of the USC-Brookings Schaeffer Initiative for Health Policy and the Leonard D. Schaeffer chair in health policy studies at the Brookings Institution. “Because increasingly, economists have been showing that [it’s the individual] who pays for the higher premiums,” says Ginsburg, who was not involved in the report. “It’s not the employers; it’s the workers. They pay for it by basically having smaller wage increases.”
More out-of-pocket expenses and higher deductibles
Out-of-pocket spending rose 14.5 percent (or $114) during the five-year period, totaling an average of more than $900 per person in 2018. At the same time, the popularity of high-deductible plans also increased, from 25.8 percent to 33.5 percent. These plans have lower monthly premiums but place more out-of-pocket responsibilities on the individual.
When people have higher deductibles than they can handle, Ginsburg says, this can quickly snowball into real financial stress. “A lot of people don’t have $3,000 if they should get sick and have large bills,” he observes.
The increase in health care utilization, combined with the rising price of services, is especially concerning if the services being accessed are not “high value,” Ginsburg says. Waste on unnecessary tests and unproven technologies will only continue to place more of a burden on the individuals and systems who pay for health care.
“If these price and utilization trends continue, we expect spending growth to stay on an upward trajectory in the coming years,” Niall Brennan, president and CEO of the HCCI, said in a statement.
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