Health care spending per person enrolled in employer-sponsored health plans hit a record high in 2017, driven by increasing prices for medical services and pharmaceuticals and not by over-utilization, according to a new study.
The average medical services and drug spending per employer-sponsored health plan participant increased 4.2% to $5,641 in 2017 from the year prior, according to the “2017 Health Care Cost and Utilization Report” by the Health Care Cost Institute.
While spending increased, the overall use of health care services changed very little over the 2013 to 2017 period, declining 0.2%. In 2017, utilization grew 0.5% compared to 2016.
Average prices for medical services and pharmaceuticals increased 3.6% in 2017. Year-over-year price growth has decelerated every year since 2013, when it grew 4.8%, slowing to 3.6% in 2016 and 2017. The lower rate of price inflation was due to year-over-year changes in average point-of-sale prescription drug prices, according to the report.
The total spending per person includes not only what the individual paid, but also includes what the health plan paid.
Out-of-pocket spending per person increased 2.6% in 2017. The growth was slower than the rise in total spending, resulting in out-of-pocket costs comprising a smaller share of spending by that year.
Out-of-pocket spending comprised 15.4% of total health care spending in 2017. This number has continued to shrink since 2013, when it accounted for 16.1%.
Here’s how the per-person average spending breaks down for 2017:
- Professional services: $1,898 (33.6%)
- Outpatient services: $1,580 (28%)
- Inpatient services: $1,097 (19.5%)
- Prescription drugs: $1,065 (18.9%)
Jump in prices mostly to blame (2013-2017)
- Total annual per-person spending increased 16.7%, rising from an average of $4,834 in 2013 to $5,641 in 2017.
- Per-person spending on pharmaceuticals and medical devices increased 29%.
- Per-person spending on inpatient care rose 10%, even though utilization fell 5% during the same period. The trend was driven mostly by rising prices in medical and surgical admissions.
- Per-person spending on outpatient surgeries jumped 14%, while the number of surgeries slipped 4%.
- Per-person spending on professional services increased 13%.
One of the most notable takeaways from the study is that more than 40% of participants in employer-sponsored health plans between the ages of 19 and 25 had no claims for health care or medications in 2017. That’s compared to 30.4% for those aged 26 to 44, 21% for those 45 to 54, and just 15.8% of those aged between 55 and 64.
The takeaway
If you are concerned about runaway costs on your company health plan, you should give us a call to discuss your options. We can work with you to find ways to reduce premiums and overall spending.
Alan Wang is the President of UBF and serves as the lead consultant. He has delivered the UBF solution set throughout the world and is highly regarded for his areas of expertise. You can follow him on Twitter @UBFconsulting.