4.6 percent increase in healthcare spending recorded for 2011

[See also: Healthcare costs raise serious concern among general public]

Per capita healthcare spending for people with employer-sponsored health insurance (ESI) increased 4.6 percent in 2011, an acceleration of the 3.8 percent increased reported for 2010, according to a new report released today by the Health Care Cost Institute.

The report, which is based on claims data of more than 40 million insured lives, or roughly 25 percent of people with ESI, showed that all major categories of health spending increased. Spending for outpatient services increase the most – 6.8 percent – while spending on prescription medications rose 1 percent, the smallest increase of the major categories studied. In all, HCCI pegged 2011 healthcare spending for people with ESI at $4,547 per person.

While it is too soon to determine whether the 2011 spending uptick is the start of a new wave of acceleration for healthcare expenditures, the study noted that spending trends should be closely monitored.

“By 2010, per capita healthcare spending growth was 3.8 percent. In 2011, per capita healthcare spending rose by 4.6 percent,” the report noted in its summary. “This suggests that 2011 is a potential transition year, and that the growth in healthcare spending in 2012 needs to be closely watched.”

According to Carolina Herrera, research director at HCCI, total per capita healthcare spending rises as a result of the combination of increases in unit costs (or prices) along with the rate of utilization of healthcare services. In 2009, spending rose 5.8 and the decrease by 2 percentage points to 3.8 percent growth in 2010 was encouraging, she noted.

“This year it jumped back up, but not as high (as 2009) to 4.6 percent, which is a little less than 1 percent,” said Herrera. “It is concerning, because we had hoped and had been reading in the press that healthcare spending was starting to slow and there was talk about bending the cost curve and people were feeling cautiously hopeful that we had come to the end of the period of high growth. Now our data suggests for the privately insured that may not be the case.”

That said, Herrera noted that this is only one year of data and suggested that 2011 may be a “transition year” where the rise is still below historical levels of spending increases, but also could be a year when the upswing begins again.

The main driver of the spending increase the study showed were increases in prices across the utilization categories which grew much faster than the rate of utilization.

Other report findings include:

  • Out-of-pocket spending increased by 4.6 percent to $735 in 2011.
  • Spending on children ages 0 to 18 rose 7.7 percent to $2,347, continuing a trend observed in 2010.
  • For 2011, most per capita healthcare dollars were spent on professional procedures ($1,566).
  • Outpatient spending grew 6.8 percent.
  • Per capita spending was the highest at $4,659 in the Northeast and grew at the fastest rate (5.3 percent) and lowest at $4,358 in the West, which also increased at the slowest rate (3.9 percent).

David Newman, executive director of HCCI, said that the figures released today should also be looked at within the broader context of the goals of health reform in order to get a feel for what they may mean in terms of the overall goal of trying to bend the cost curve.

“If you look at what the goal of the Affordable Care Act was, it is to bring down overall healthcare spending growth down to GDP (gross domestic product) plus one percent in the first few transition years,” he said. “Numbers of around 4.2 percent growth would be reasonable, from a political perspective.” [See also: Healthcare attracting ‘critical mass’ of service providers]

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