Healthcare Spending

We all know healthcare prices keep rising, but by how much?

• Both payer spending and out-of-pocket costs rose 16.7%:
• The total per person average spend in 2013 = $4,834
• The total per person average spend in 2017 = $5,641

Where do we spend our healthcare dollars?

• Inpatient services = $1,097
• Outpatients visits and procedures = $1,580
• Professional procedures = $1,898
• Prescription drugs = $1,065
• Rx claims costs include discounts from the wholesale or list price, but not rebates paid through separate transactions.

Figure 1 depicts annual per person spending, by type of service.

Healthcare Utilization and Trend

In 2017, overall healthcare utilization increased 0.5% from the previous year, but actually declined 0.2% between 2013-2017. Total average price for services increased 3.6% in 2017, which was similar to the growth rate in 2016. Figure 2 shows the changes in price by services during the 5-year study period.

Service TypeUtilization RateCost of ServiceInpatient admissions

• Declined between 2013-2015
• Leveled off through 2017

Increased 3% in 2017:

• This is the lowest growth during period

Outpatient facility visits and proceduresLittle cumulative change between 2013 and 2017:

• Declines in beginning of the period were offset by increases in later years

Increased 5.7% in 2017:

• This was the largest increase during the period

Professional servicesLittle cumulative change between 2013 and 2017:

• Declines in beginning of the period were offset by increases in later years

Increased 3.5% in 2017:

• This was the largest increase during the period

Prescription Drugs

• The number of filled prescription days was relatively flat from 2013-2016

• Increased 3.3% in 2017

Point-of-sale prices increased 1.4% in 2017:

• This was the slowest rate of growth during the period

Figure 2 | Price Change by Service, 2013-2015

Healthcare Spending by Age

The report broke down the claims data by age. Figure 3 displays the age distribution of the population.  Interestingly, more than 25% of the population was under the age of 18. Per person spending in 2017 for that age group was the lowest; spending increased with age:

• Members aged 0-18 = $3,170
• Members aged 55-64 = $10,476

The report also identified that 25.5% of the population received no healthcare services in 2017 (see figure 4). That’s right, 0. Your initial thought might be, “that’s great. These people aren’t costing me anything more than their premiums.”

And technically you would be right about the year they didn’t receive services. But that means they didn’t get recommended screenings like mammograms or prostate exams. They probably didn’t get a flu shot, have no idea if they have high blood pressure or pre-diabetes, and could be a shovel full of snow away from a heart attack. What you don’t know could end up costing you a lot more in the long run, when catastrophe comes knocking on the doors of these untreated members. And you will pay most of the costs for those bills.

 How many of your members go untreated each year?

 How does that impact your healthcare spend?

Read Metabolic Syndrome – A Medical Term for the Ticking Time Bomb to learn more.

Chronic Condition Trends

According to the report, which looked at 5 chronic conditions, there is some good news and some bad news. Between 2013-2017, the share of the study population saw (see Figure 5):

• An increase in the rate of ADHD diagnoses, from 2.5% to 4.2%
• An increase in the rate of asthma diagnoses, from 6.6% in 2013 to 8.8%
• A slight decline in the percent of population diagnosed with hypertension, from 13.8% to 13.3%
• The share of the population diagnosed with CHF remained stable, at 0.4%
• The share diagnosed with diabetes also remained stable, at 5.1%

There was a slight increase in the percentage of the population diagnosed with at least 1 of the 5 chronic conditions between 2013 and 2017 (see figure 6).

% Diagnosed20132017with 1 Chronic Condition17.9%19.8%With 2 or more chronic conditions4.9%5.6%

Figure 6 | % of Population Diagnosed with Chronic Conditions

As expected, the cost of treating persons with more than 2 or more chronic conditions was higher than for those with one (see Figure 7). In 2017:

• 1 chronic condition averaged $8,921
• 2+ chronic conditions averaged $20,257 in 2017

How Does this Information Help You?

I’ve only touched on half of the information covered in the 2017 Heath Care Cost and Utilization Report. There is more detail on spending and utilization by service category, which I may cover in a future blog.

All the information in the report can help you see how your population compares.

• Are you paying more for inpatient claims?
• Are your employees’ out-of-pocket costs higher or lower?
• How many of your members didn’t incur a claim last year?

And while this comparison is useful, nothing is as valuable as understanding how your population is actually performing. For that, you need to integrate your health and pharmacy data at a minimum. The more data you integrate and analyze, the greater insight you will have into the savings opportunities you have in your benefit programs.