Once again health care spending in America grew much faster than the economy as a whole. After a few years of slowdown in growth (likely resulting from the broader economic downturn), health care spending in 2011 picked up. According to a new report by the Health Care Cost Institute, spending among people with employer-sponsored insurance grew by 4.6 percent in 2011.
The report found spending did not increase because of greater utilization. Americans with employer-provide insurance are using about as much healthcare as they did in previous years. The growth came primarily from hospitals, labs, and doctors charging more. From the report:
In 2011, spending on inpatient facility services, per capita, grew 4.8 percent to $963. Inpatient admissions declined by 0.5 percent whereas inpatient prices, which were the highest average prices of any service category, rose 5.3 percent to $15,674. Increases in inpatient unit prices — the price paid adjusted for the resource mix to serve patients — outpaced increases in intensity (a metric indexing complexity of service), leading HCCI to conclude that in 2011 rising unit prices drove increases in inpatient spending.
Despite some increases in utilization, HCCI found spending growth was driven primarily by increases in the prices paid. In 2011, utilization increased for outpatient facility services and professional procedures, and declined for inpatient admissions and filled prescriptions. However, the growth in prices at the major service level outpaced changes in service use. For all major service categories, increases in prices paid were driven by increases in the underlying unit price.
This is the ongoing cost problem with the American healthcare system. It is not that Americans are unusually fat or sick. It is not that Americans just loving going to the doctor more than anyone else; our utilization rates are often lower than most other countries.
The problem is primarily that we pay radically more for the same procedures, tests and medications than any other first-world country. Until we adopt one of the proven price control systems other first-world countries have used for decades — single payer or all-payer — our health care cost will continue to grow at a crushing rate.