American health care continues to get more expensive, but the increase is driven by us getting overcharged more for the same services and not by us utilizing more health care. This is a key finding of a new Health Care Cost Institute report on 2010 health care costs.

Rising prices for care were the chief driver of health care costs for privately insured Americans in 2010, according to the first report from the newly formed Health Care Cost Institute (HCCI). The per capita spending on inpatient and outpatient facilities, professional procedures, and prescriptions drugs rose 3.3 percent in 2010 for beneficiaries under age 65 with private, employer-sponsored group insurance. HCCI data show that this 3.3 percent increase follows spending increases in 2008 (6.0%) and 2009 (5.8%). Hospital and ambulatory care facility prices rose by 5.1 and 10.1 percent, respectively, in 2010. Increases in facility prices were offset by decreases in the number of inpatient admissions (-3.3 %) and use of outpatient facilities (-3.1%). HCCI confirmed 2010 prices for the privately insured grew more than utilization after accounting for changes in the mix of medical services provided in hospitals (0.7%) and outpatient facilities (4.6%).


Utilization Trends. Overall use of health care services declined in 2010. Usage dropped by more than 5 percent for medical inpatient admissions, emergency room visits, primary care provider office visits, and radiology procedures. On average, each insured person filled more than nine prescriptions in 2010. The number of brand name prescriptions dropped by nearly 4 percent, while the number of generic prescriptions increased by 2.5 percent.


  • Prices were the main driver of increases in per capita spending from 2009 to 2010.
  • 6.4% The increase in the average price paid for an inpatient surgical admission in 2009 ($25,469) compared to 2010 ($27,100).
  • 8.9% The increase in average facility price paid for outpatient surgery in 2009 ($3,163) compared to 2010 ($3,443).
  • 11.0% The increase in the average facility price for an emergency room visit in 2009 ($1,195) compared to 2010 ($1,327).
  • 13.0% & -6.3% The change in average price per brand name and generic drug prescription, respectively (2009 to 2010).

It is worth repeating that American health care is so expensive simply because we pay way more for the same drugs, procedures and tests than any other country (See chart). Efforts to try to make people better health care “consumers” through cost shifts and private insurance exchanges are not workable solutions. We already have incredibly high out of pocket costs, yet we still have the most expensive health care in the world.

If you want to bring down health care spending, you need to deal with our extremely high prices. You need a system wide method to unify and control the prices charged for health care services and products. Every first world country does this either through all-payer, even where there are multiple insurance companies, or directly through a single payer system.

We would effectively eliminate our long-run deficit issue by adopting an all-payer system.  But so many health care providers and companies are making such huge, unjustifiable profits under our broken system they are able to bribe provide enough campaign and think tank donations to prevent the idea from ever even being seriously debated in Congress.