Health Spending Grows Faster Than Expected

At a growth rate of 4.6%, U.S. health care spending for people with employer-sponsored coverage grew faster than expected in 2011, according to the Health Care Cost Institute (HCCI). Health care spending growth had been on a downward trajectory for those with employer-sponsored insurance – from 5.8% in 2009 to 3.8 % in 2010. And with a sluggish economy, many experts expected a modest growth rate for 2011.

But, prices rose for all major health care categories including hospital stays, outpatient care, procedures, and prescriptions. Prices rose fastest for outpatient care.

HCCI Executive Director David Newman said, “Prices continue be the main culprit for rising health care costs. If we are really going to get health care spending under control, we have to better understand why those prices are rising and the implications those increases have for the U.S. health care budget.”

A slowdown in prescription spending partly offset overall health care spending. Prescription costs grew just 1% from 2010 to 2011, rising to $773 per capita. Brand name prescription prices rose 17.7% to an average of $268 per prescription. But the use of brand name prescriptions fell nearly 13%. Generic prices fell 7.2% to an average of $33 per prescription while the use of generics rose 3.4%.

In 2011, the growth rate of spending on children increased 2.1 percentage points to 7.7%, which is more than twice the growth rate of spending for people aged 19 to 44 and 55 to 64.

Cost sharing remains stable among patients and payers. Spending on health care was split between consumers and insurance companies in much the same way as in previous years, with insurers paying for 83.8% of total expenditures and insured enrollees paying 16.2%. Payers contributed $3,812 per person in 2011.

In 2011, people with employer-sponsored insurance used more outpatient services and had more procedures than in 2010. Emergency room visits increased 3.7%. However, patients had fewer hospitals stays and prescriptions filled.

In 2011, out-of-pocket spending reached $735 per person – a $32 increase from 2010. Costs covered by insurance grew at nearly the same rate. Spending grew fastest for outpatient services, for people ages 18 and younger, and for people in the Northeast. Spending grew the slowest for prescriptions. For more information, visit http://www.healthcostinstitute.org/2011report

Last Updated 7/11/2017

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