WASHINGTON (October 5, 2020) — Average annual health care spending for individuals with employer-sponsored insurance (ESI) rose 2.9% to $6,001 per person in 2019, according to the Health Care Cost Institute’s annual Health Care Cost and Utilization Report. Between 2015 and 2019 spending increased by 21.8% or $1,074 per person. While prices continued to grow each year, utilization of health care services declined slightly in 2019, leading to slower year-to-year spending growth.
“While most of the world’s focus appropriately remains on the COVID-19 pandemic, the fact remains that health care spending in the US continues to grow at unsustainable rates” said Niall Brennan, president and CEO of HCCI. “Unit price increases continue to drive increases in spending. Hospital prices increased by almost 31% from 2015-2019, leading to a 14.4% increase in spending despite a 12.5% decline in hospital utilization.”
Despite recent increases in use, changes in the mix of services, and demographic shifts, rising prices remain the primary driver of spending growth between 2015 and 2019 - responsible for nearly two-thirds of total per-person spending growth.
The report examines four groups of health care services. Of the four major categories, outpatient visits saw the highest spending increase from 2015 to 2019 (31.4%). Other notable trends include:
- Professional services.
- Spending per person increased 14.8% over 5 years.
- Prices increased 10.5% while the utilization of professional services increased 3.9% over 5 years.
- Inpatient spending.
- Spending per person on inpatient admissions rose 14.4% between 2015 and 2019, though the 2019 spending growth was lower than previous years due to declining utilization.
- Prices for inpatient admissions grew 30.8% over 5 years, the highest price increase of any service category.
- Increases in prices and use led to a 31.4% increase in spending over 5 years.
- Prices increased 22.5% while the utilization increased 7.3% over 5 years.
- Prescription Drugs
- Spending on prescription drugs increased 28.4% over 5 years.
- Prescription drugs was the only service category that saw utilization grow faster than prices from 2015 to 2019. Point-of-sale prices for prescription drugs increased 13.0% while utilization increased 13.6% over five years.
Out-of-pocket spending increased $91 per person over 5 years. Half of the out-of-pocket spending in 2019 was for professional services. Study authors stressed that the analysis does not consider other potential out-of-pocket costs related to health care.
Methodology. Since 2011, HCCI has tracked, independently analyzed, and reported health care spending, utilization, and prices each year in its Health Care Cost and Utilization Report, using deidentified claims data of people up to age 65 with employer-sponsored health insurance. HCCI analyzed data from more than 2.5 billion medical and prescription drug claims for approximately 55 million individuals annually between 2015 and 2019. Claims data come from CVSHealth/Aetna, Humana, and Blue Health Intelligence — representing one-third of the employer-sponsored insured population. Measures of drug spending reflect discounts negotiated from the wholesale price of drugs but do not include manufacturer rebates that are provided through separate transactions. Thus, drug prices reflect the point-of-sale prices. Nationally, Black and Hispanic populations are underrepresented in employer-sponsored insurance. The racial and ethnic distribution of the population in HCCI’s data is similar to the national employer-sponsored insurance population, as such health care spending and use among these individuals are likely under-represented in the findings in this report.
About the Health Care Cost Institute
The Health Care Cost Institute’s mission is to get to the heart of the key issues impacting the U.S. health care system — by using the best data to get the best answers. HCCI stands for truth and consensus around the most important trends in health care, particularly those economic issues that are critical to a sustainable, high-performing health system. Launched in 2011, HCCI currently holds one of the largest databases for the commercially insured population, and in 2014 became the first national Qualified Entity (QE) entitled to hold Medicare data. Academic and government researchers interested in licensing our commercial data can learn more at https://healthcostinstitute.org/dataaccess-hub. For more information, visit healthcostinstitute.org or follow us on Twitter @healthcostinst.