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Healthcare Costs Increase During Recession

May 25, 2012
Healthcare cost

U.S. healthcare prices in 2010 rose faster than inflation, even though patients actually used less medical care in many categories, a study from the Health Care Cost Institute has discovered.

According to the new findings, health costs in the United States rose 3.3 per cent, a rate more than double that of inflation, and the experts say that the increase happened not because people used lot of unnecessary procedures and treatments but rather because the services themselves became more pricey. The results are based on about 3 billion claims for people with four of the nation's largest employer-sponsored insurers such as Aetna, Humana, UnitedHealthcare and Kaiser Permanente. The data represent about 20 per cent of the individuals with insurance nationally, but do not include spending for those who are on Medicare, Medicaid or who have private insurance.

The HCCI report found that spending on healthcare services in 2010 was about $4,200 on average, but varied widely by age. Patients with the ages between 55 and 64 years old paid an average of $8,300 for their health care, while people under the age of 18 years spent an average of $2,123. Even with the relatively low annual spending among young people under 18 years of age, it was still the fastest growing age group in the study.

The report also found that out-of-pocket costs for inpatient surgical procedures were on average $700 in 2010 - a rise of nearly 11 per cent from 2009. Likewise, patients encountered the same 10.7 per cent increase for outpatient surgical procedures with an average out-of-pocket expense of $162. Prices for prescription drugs went up 3 per cent to $82 per prescription, from $80 in 2009. But the price increase was triggered by brand name drugs whose prices grew 13 per cent in 2010. Prices for generic drugs dropped by 6.3 per cent in the same period of time. There was only one category which saw the decline in prices: nursing home care, which saw a 3.2 per cent decrease in the cost per admission. Meanwhile, one of the areas with the fastest growing spending was medical care for kids.

Among some other findings of the study:

  • The average cost for an emergency room trip was $1,327 in 2010, an 11 per cent increase from 2009.

  • The overall cost of professional procedures, including visits to a doctor, laboratory tests, and diagnostic imaging, grew by 2.6 per cent;

  • Payments for office visits, including primary care and specialist providers, increased by over 5 per cent;

  • Overall use of healthcare services dropped in 2010, decreasing by more than 5 per cent for medical inpatient admissions, visits to primary care provider office, and radiology procedures.

Experiencing a hard time with rising costs, some states and insurers started to look for new ways to handle the problem. For example, in the state of Massachusetts, both supporters and opponents are arguing over a proposal that would put financial penalties on hospitals or other healthcare providers who will charge more than a specified state median of 20 per cent for a medical service provided. In North Carolina, one of the biggest insurers plans to negotiate contracts with hospitals and other healthcare providers that limit increases to no more than the medical inflation rate.

The experts want to carry out another research on the matter in order to find out what are the reasons behind the growth in pediatric spending. It is assumed that possibilities could include big expenses for babies who are born prematurely, the rising numbers of obese kids or a growing need for mental health and behavioral services. The future report could also reflect how many families increasingly struggle to pay their share of medical costs by skipping or delaying doctor visits for their kids. According to Irwin Redlener, a professor at Columbia University's Mailman School of Public Health and president of the Children's Health Fund, even families who have employer-based insurance are seeing their prices growing; however, their salaries stay the same.

This study is very important as it clearly shows that increased costs for medical services are driving health care cost growth, said Karen Ignagni, president and CEO of America's Health Insurance Plans. Bringing down costs for medical services is critical in order to make health care coverage more affordable for people, Ignagni said.

Tags: Career & Money, Health