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Price hikes offset slower health care use

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So much for all those employer wellness programs.

Newly available data from private health insurance plans show that price hikes by hospitals, doctors and drug companies have kept employer spending rising recently even as their employees and dependents have moderated their consumption of health care services.

The analysis of health insurer data was conducted by the Health Care Cost Institute, a group in Washington, D.C., formed to analyze the data reported to meet new requirements of the 2010 Patient Protection & Affordable Care Act.

The data are from four health insurers—Minnesota-based UnitedHealth Group, Louisville-based Humana Inc., Hartford-based Aetna Inc. and California-based Kaiser Permanente. Indianapolis-based WellPoint Inc. was not part of the analysis.

The data cover only Americans under 65 that are covered by employer-sponsored health insurance, which is typically the most lucrative form of payment for hospitals and doctors. Health care experts have said for years that doctors and hospitals hike prices for employer-sponsored insurance in order to offset payments from government-sponsored plans like Medicare and Medicaid that do not fully cover their costs.

Overall spending on health care services rose 16 percent from 2007 to 2010, when it averaged $4,255 per patient.

From 2007 to 2010, the number of hospital stays per 1,000 people covered by employer-sponsored insurance plans fell 7 percent. But during the same time, the price per stay jumped 20 percent. As a result, total spending for hospital stays rose nearly 12 percent, to $893 per person covered by private health insurance.

ER visits and outpatient surgeries at hospital facilities were unchanged from 2007 to 2010, but prices rose nearly 32 percent.

Outpatient procedures, such as lab and pathology tests, imaging and other ancillary services, saw both utilization and prices rise about 8.5 percent from 2007 to 2010.

Total spending on outpatient services average $1,126 per patient in 2010.

Physician fees for office visits and procedures performed rose nearly 7 percent during those three years, a tick ahead of the 5-percent rise in use. Per-person spending on physicians averaged $1,472 in 2010.

And drug prices rose 11 percent even as the rate of prescription patients rose just 2 percent. Per-person spending on drugs in 2010 averaged $765.

“We hope this report will help people get a much clearer picture about what triggers health care growth and spending,” David Newman, executive director of the Health Care Cost Institute, said in a prepared statement. “Having this amount of data allows us to drill down and examine the underlying causes of health care spending among a population that hasn’t been studied extensively in a way that can provide answers to important questions.”

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  • Insurance isn't the enemy
    I read these comments by doctors and pharmacists, but I am very skeptical. Every time I examine my detailed bill from my doctors, I find that the insurance firms have forced the doctors to accept roughly 10% of what the doctors originally billed me for the service. How exactly can it be the insurance firms responsible for rising medical charges when they are forcing doctors to make 10x reductions in the amount the doctors try to charge. Insurance firms are the only ones out there helping keep the cost of medical care under control. Don't take my word for it - just carefully examine the bill for your next medical procedure.
  • big surprise!
    They find in their "data" that rising prices are due to everyone else's actions, not theirs. Anyone else smell something horribly rancid? The others commenting are correct. It doesn't matter how much doctors "charge" since they only get paid whatever the insurance company pays them. Insurance would never pay more than medicare pays, under any circumstances. There may be very immoral doctors and hospitals out there that take advantage of the pay for service system, but they are the small minority.
  • Wrong data
    This data is compiled by the large private insurance companies and it is in thier best interest to show that they are the good guys. The data is wrong and as a independent pharmacist I have no way of increasing my prices for drugs or my fees. Insurance companies do not give you a raise when gas prices are $4.54/gal. The above article is full off hot air and i hope people wake up.
  • Article is not true
    I am a pharmacist and the above article is not true. As a independent pharmacy we have been receiving less monies for the same task than what we were 7 years ago. We have to take what is given to us or loose the business to big box retail stores. Express scripts pays a pharmacy 0.40 cents to fill a prescription. Guess why walgreens left the network
  • Death sentence
    I'm just wondering how long the American medicine would survive until it collapses under its own financial weight. Only total collapse would trigger real reforms in the field. And don't blame the doctors in the disaster, they are just employees and can't change the system much.
  • Broken
    The system is broken. Empirical data shows that single payer gives society the biggest bang for the buck. Health insurance for none, health care for all.
  • The next bubble
    It is time to recognize that using insurance to pay for health care was a mistake. It looked like a good idea when we started in the 50's especially since having employers buy the insurance gave a tax break. It still looks OK if you ignore the fact that it destroys price competition and causes prices to grow like cancer. Costs have gone from a few percent of the economy to 18% and are growing faster than ever. The damage to our standard of living is going to be catastrophic. We have to abandon this model of payment.
  • Absurd
    This is not a fair characterization of how negotiations work, at least on the independent physician practice side of things. Doctors do not "hike" prices. They are forced to accept certain rates or "leave the network" and likely go out of business.

    Physicians also do not hike prices to offset Medicare or Medicaid. How can one offset prices when commercial rates are often LOWER than Medicare?

    The idea that physicians are driving this is crazy.

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