Price hikes offset slower health care use

May 29, 2012

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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