Several Factors Are Driving Employers’ Health Care Costs

The majority of growth in employer healthcare spending was driven by an increase in the cost per case of medical and surgical procedures. Other cost drivers are rising specialty drug prices and the ongoing obesity epidemic, which is an underlying driver of many of the diseases noted in the report by Truven Health Analytics.

Twenty specific medical episodes account for 41% of the  growth in employer healthcare spending. From 2006 to 2011, employer healthcare costs increased 4.3% a year, driven largely by spending in the following areas:
• Preventive health services.
• Osteoarthritis (except spine).
• Multiple sclerosis.
• Childbirth (Cesarean section).
• Complications of surgical and medical care.

Bill Marder, PhD of Truven Health Analytics said, “On the positive side, a great deal of employer healthcare spending growth is being driven by preventive services. However the growth is big enough to raise questions even there. Other cost-drivers that show up in these data, such as the obesity epidemic, are creating real challenges for employers as they try to balance the cost/quality equation.”

The study also found the following:
• Outpatient medical services are driving spending growth. Inpatient services are expensive, but they affect fewer people.
• Musculoskeletal conditions make up the costliest and fasted growing group of diseases.
• Complications of surgical and medical care are occurring more frequently, partly due to the growing use of surgery to treat orthopedic conditions
• More plan members are using preventive services, such as general medical exams, vaccinations, and cancer screening.

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Last Updated 10/13/2021

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