Healthcare Spending Growth Expected to Remain Low

The growth in healthcare spending will continue to be held down by the sluggish economy, the continued shift of healthcare costs from the employer to the employee, and the movement towards value-based reimbursement models, according to a report by Fitch Ratings. The rate of increase in U.S. healthcare spending is likely to remain low even as the end of the tepid economic recovery gives way to more robust growth.

Health spending grew 3.9% annually from 2009 to 2011, compared to an annual growth rate of 4.7% to 6.6% the prior three years, according to data from Centers for Medicare and Medicaid Services. Two recent studies were published in Health Affairs that provide some insight into the causes.

One found the weaker economy accountable for 37% of the lower spending trajectory and attributed an additional 8% to cuts in Medicare reimbursement and decline in commercial insurance coverage. The study leaves 55% of the reduction unexplained. The other study indicated that benefit design changes (including higher deductibles and out of pocket costs) contributed to 20% of the lower increase in spending. For more information, visit www.fitchratings.com.

How the Adult Mandate Affects Healthcare Spending

AdultMandatehealthcareTotal health care spending increased 0.2% for large employers that offered dependent coverage to children up to age 26. Workers paid for some of that spending through cost sharing and their share of the premium while employers paid for the remainder, according to a report by the Employee Benefits Research Institute (EBRI).

The Affordable Care Act (ACA) requires plans and issuers that offer dependent coverage to make it available until a child reaches the age of 26. While employers are not allowed to directly charge higher premiums for the cost of adult-dependent coverage, employers and workers will share the higher cost of health care services through claims payments, cost sharing, and worker premiums.

EBRI found that these newly covered dependents were more likely to incur claims related to mental health, substance abuse, and pregnancy. It has been estimated that 3.1 million young adults have acquired health coverage under the provision. For more information, visit www.ebri.org.

Study IDs reasons for higher employee health care spending

A study in Health Affairs showed employees with depression spent 48% more on health care than those who were not depressed. Health care spending also was higher for workers with high blood pressure or blood glucose or those who were physically inactive, smoked or were obese. Emory University researchers said well-designed and implemented follow-up health programs are needed to change employee behaviors and reduce health risks. MedPage Today (free registration) (11/6)

Last Updated 10/20/2021

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