Spending on insurance plans has increased nearly 50% in the last 10 years, as healthcare costs in the US continue to skyrocket

  • The US total healthcare spending has increased, and the trend is expected to continue.
  • A new study showed that spending on health services for those with employer-sponsored insurance plans increased by 44% over the past decade.
  • Brand-name prescriptions, emergency department visits, and outpatient surgery were the categories that accounted for the greatest proportion of spending increases.

The US is spending more on healthcare than ever before.

A new study published in Health Affairs on Wednesday found that total spending on health services, excluding premiums, for those with employer-sponsored insurance plans increased by 44% from 2007 to 2016.

Researchers found that spending increased across all major categories of health services, although the amount each category increased by varied. The costs of services rising also plays a role in the increase in total spending.

The study was done by using a national sample of 40 million health care claims data from the Health Care Cost Institute, and included contribution from insurers Aetna, Humana, Kaiser Permanente, and UnitedHealthcare.

About half of the US population is covered under employer-sponsored insurance, according to Niall Brennan, president of Health Care Cost Institute. This survey captures about a quarter of that population.

Enrollment in high deductible health plans grew from 5% in 2007 to 29% in 2016. Overall, Brennan estimates that overall insurance coverage has gone up for people both with and without employer-sponsored insurance.

Brand-name prescriptions, emergency department visits, and outpatient surgery accounted for nearly half of the spending increase. Out of pocket spending rose 43%, attributed to emergency department visits. Brennan said outpatient surgeries are increasing because they tend to be a substitution for hospitalisation. Hospital outpatient service spending (including non-overnight care and surgeries) increased more rapidly than other types of services. Prescription drug spending is driven by the introduction of new and innovative drugs, but also the persistent increase across all types of drugs.

Brennan said this trend feeds into the key issue of unconstrained growth in healthcare spending. With the increasing amounts of mergers and acquisitions in the healthcare space, hospitals are taking over other hospitals and private practices. With this, insurance agreements and service charges change so patients can end up paying more for the same services from the same doctors in a large hospital system than they did in a private practice.

Competitive dynamics between hospitals can also make it harder for insurers to negotiate down prices.

This trend is forecast by the Center for Medicare and Medicaid Services to continue. Right now, healthcare spending accounts for about 17.5% of the GDP. In the next 8-10 years, it’s predicted to rise to 19.2%.

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