Healthcare spending is higher over 5 years, mostly due to a rise in prices, says new report

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Between 2014 and 2018, per-person yearly spending, for those with employer-sponsored insurance, climbed 18.4%.

A new report confirms concerns about healthcare costs, as it shows per-person spending is increasing faster than per-capita gross domestic product.

Between 2014 and 2018, per-person yearly spending, for those with employer-sponsored insurance, climbed  from $4,987 to $5,892, an 18.4% increase, according to the 2018 Health Care Cost and Utilization Report released Thursday.  The average annual rate of 4.3% outpaced growth in per-capita GDP, which increased at an average 3.4% over the same period.

There’s an exception from 2017 to 2018, when per-capita GDP grew slightly faster than healthcare spending per person.

The $5,892 total includes amounts paid for medical and pharmacy claims but does not subtract manufacturer rebates for prescription drugs.

Healthcare spending grew 4.4% in 2018, slightly above growth in 2017 of 4.2%, and the third consecutive year of growth above 4%.

After adjusting for inflation, spending rose by $610 per person between
2014 and 2018.

The cost estimates are consistent with National Health Expenditure data from the Centers for Medicare and Medicaid Services, the report said.

WHAT’S THE IMPACT

Higher prices for medical services were responsible for about three-quarters, 74%, of the spending increase above inflation. These increases were across all categories of outpatient and professional services.

Average prices grew 2.6% in 2018. While that is the lowest rate of growth over the period, consistent year-over-year increases mean that prices were 15% higher in 2018 than 2014.

The increase for outpatient visits and procedures was $87 in 2018, the largest annual increase between 2014 and 2018.

Average out-of-pocket price for ER visits increased more sharply than other subcategories of outpatient visits, though all saw an increase in the average amount for which patients were responsible

Professional service spending per person rose $86 in 2018, reflecting an acceleration in spending growth consistent with previous years’ trends, according to the report.

Inpatient services and prescription drugs also saw an increase in spending per person.

Inpatient admissions increased $24 in 2018, a smaller annual increase than in 2016 or 2017, but above the rise in 2015.

Per-person spending on prescription drugs rose $50, similar to increases in 2016 and 2017, but smaller than the rise in 2015. The total does not reflect manufacturer rebates.

On average, Americans with employer-sponsored insurance spent
$155 out-of-pocket on prescription drugs in 2018.

Prices rose, as did utilization, which grew 1.8% from 2017 to 2018, the fastest pace during the five-year period. And because of the higher price levels, the effect of the increase in utilization in 2018 on total spending was higher than it would have been in 2014.

Higher utilization may be the result of a population that got slightly older between 2014 and 2018. The population also became slightly more female.

People with job-based insurance saw their out-of-pocket costs rise by an average of 14.5%, or $114, between 2014 and 2018.

THE LARGER TREND

As most Americans have job-based health insurance, this data is critical for understanding overall health costs in the United States, the report said.

An estimated 49% of the U.S. population, about 160 million people, had employer-based health insurance in 2018, based on Census data.

The report combined data from large insurers, using 4,000 distinct
age/gender/geography combinations. It contains previously unreported information drawn from 2.5 billion insurance claims.

Claims data is the most comprehensive source of real-world evidence available to researchers as databases collect information on millions of doctors’ visits, healthcare procedures, prescriptions, and payments by insurers and patients, giving researchers large sample sizes, the report said.

 

How runaway healthcare costs are a threat to older adults — and what to do about it

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Authors call for allowing Medicare to directly negotiate drug prices with manufacturers, which is currently prohibited by law.

Empowering Medicare to directly negotiate drug prices, accelerating the adoption of value-based care, using philanthropy as a catalyst for reform and expanding senior-specific models of care are among recommendations for reducing healthcare costs published in a new special report and supplement to the Winter 2019-20 edition of Generations, the journal of the American Society of Aging.

The report, “Older Adults and America’s Healthcare Cost Crisis,” includes a dozen articles by experts and leaders from healthcare, business, academia and philanthropy.

The authors examine the major drivers of the high cost of healthcare and its impact on patients, then offer solutions that can reduce costs and potentially improve the quality of care for older adults and society at large.

Topics include the employer’s role in reining in healthcare prices; the high cost of prescription drugs; investing in the social determinants of health; the value of home-based acute care; the need for oral health programs for older adults; value-based payment reform; and the geriatric emergency care movement.

WHAT’S THE IMPACT

In the report’s lead article, West Health President and CEO Shelley Lyford and Timothy Lash, chief strategy officer of West Health and president of the West Health Policy Center, called for allowing Medicare to directly negotiate drug prices with manufacturers, which is currently prohibited by law.

They write it “would be a game-changing lever that could force prescription drug manufacturers to bring down prices and lower costs for older Americans.” They also said it’s essential to quickly move from unfettered fee-for-service to value-based payment models, and that more transparency on price and quality is needed so consumers and other purchasers can make more informed decisions about care.

Among the other recommendations are for employers to demand greater price accountability from hospitals and health plans, and to take the lead in adopting value-based payment models.

Authors also call for establishing senior-specific models of care, including geriatric emergency departments, which may improve health outcomes and reduce hospital admissions, and senior dental centers, which can address what they call an epidemic of oral health problems among older adults.

They also support widespread use of home-based acute care, which they say increases the value of healthcare.

THE LARGER TREND

As spiraling U.S. healthcare costs dominate policy agendas at the state and federal level, older adults — the largest group of consumers of healthcare services — have a particularly high stake in solving the crisis. According to a 2019 West Health-Gallup poll, seniors withdrew an estimated $22 billion from long-term savings in the past year to pay for healthcare and an estimated 7.5 million were unable to pay for a prescribed medicine.

 

Cartoon – I can’t afford that diagnosis

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