Working Americans using less health care, but paying more, report says

Working Americans using less health care, but paying more, report says

January 24th, 2018 by Elizabeth Fite in Local Regional News

The Chattanooga headquarters of BlueCross BlueShield of Tennessee is shown in an aerial view.

Photo by Dan Henry /Times Free Press.

Workers in the U.S. used fewer health care services but paid more for health care in 2016 than in previous years, according to a report released Tuesday.

Among people with employer-sponsored insurance and their dependents, health care spending increased by 4.6 percent in 2016 compared to 4.1 percent in 2015. The analysis from the independent, nonpartisan Health Care Cost Institute looked at spending, prices and health care utilization trends from commercial claims data.

Nearly all of the spending growth can be attributed to price increases, not to increases in utilization, said Niall Brennan, president of Health Care Cost Institute.

"It is time to have a national conversation on the role of price increases in the growth of health care spending," Brennan said in a statement. "Despite the progress made in recent years on value-based care, the reality is that working Americans are using less care but paying more for it every year."

Fast facts

Over a five-year study period:

  • Prescription drug spending increased 27 percent despite flat or decreasing generic drug prices and less brand drug use.
  • The average price for an emergency room visit increased 31.5 percent and drove outpatient spending, yet the number of visits grew slightly.
  • The average price for surgical admissions increased by almost $10,000 despite a -16 percent decline in utilization, and the price for outpatient surgery rose more than 19 percent.
Data taken from Health Care Cost Institute’s 2016 Health Care Cost and Utilization Report.

In particular, rising prices for prescription drugs, surgery and emergency department visits contributed to the spending growth.

Mary Danielson, a spokeswoman for Tennessee's largest insurer, BlueCross BlueShield of Tennessee, said "prescription drugs really stand out" as driving prices in the state. They account for more than 23 cents of each member's premium dollar.

"The average cost of specialty drug prescriptions increased 158 percent from 2008 to 2016, and brand-name prescription inflation is rising 15 times faster than the Consumer Price Index," she said, adding that unnecessary emergency department visits and surgeries, such as hip and knee replacements, are also factors.

"People don't necessarily understand how directly connected premiums are to what doctors, hospitals and drug companies charge," she said. "Also, new drugs and new technologies don't necessarily provide better outcomes, but they are usually more expensive. We work to balance access to evidence-based care with cost effectiveness."

Public health and economics expert Robert Lieberthal, an assistant professor at the University of Tennessee at Knoxville, said health care spending has gone up every year since researchers began tracking it, "but the real question is, 'Is the rate increasing or slowing down?'"

While the report found that out-of-pocket spending for consumers also increased, the rate was slower than total spending, but Brennan said "that should not be interpreted as a sign that these are the glory days for U.S. health care consumers."

"Out-of-pocket spending is just one component of consumer exposure to health care costs, and they may be facing this exposure through higher premiums, or reduced benefits, or both," he said.

Third-party payers, such as the insurers, not out-of-pocket payers, do most of the actual spending, Lieberthal said.

"That might be something that's surprising to people: how much of the care is coming from a source other than the one receiving the care," Lieberthal said.

Nevertheless, Brennan said consumers are "undoubtedly" affected.

"Somebody's got to pay for this, so I think a lot of the discussion around rising premiums in recent years definitely implicates these price increases and their impact on consumers," he said, adding that many other possible factors, such as increased consolidation in the provider market, could cause price increases, but more research is needed.

The full report calculates spending, prices and utilization for four broad categories — inpatient, outpatient, professional services and prescription drugs — before breaking the findings into 35 subcategories.

Lieberthal said the report provides a great resource for understanding the complexities of the nation's health care spending, but cautioned readers that isolated statistics are snapshots of the "full picture."

"It does represent only part of the data for health care spending in the United States," he said. "So it's important to compare this report with other analyses."

Contact staff writer Elizabeth Fite at efite@timesfreepress.com or 423-757-6673.