Start Your FREE Membership NOW
 Discover Proven Ways to Be a Better Medical Office Manager
 Get Our Daily eNewsletter, MOMAlert, and MUCH MORE
 Absolutely NO Risk or Obligation on Your Part -- It's FREE!

Upgrade to Premium Membership NOW for Just $90!
Get 3 Months of Full Premium Membership Access
Includes Our Monthly Newsletter, Office Toolbox, Policy Center, and Archives
Plus, You Get FREE Webinars, and MUCH MORE!

Health care spending grew in 2014, with more dollars going to brand drugs

Spending on health care for the privately insured in the United States grew at a steady rate over the past five years, increasing 3.4 percent in 2014, finds a new report from the Health Care Cost Institute (HCCI), a nonpartisan research organization.

Use of health care services continued to fall in 2014, while prices for all categories of services continued to rise. Despite a nearly 16 percent decrease in use of brand prescriptions, spending on these prescriptions jumped by $45 per capita in 2014—an increase four times larger than in 2013. Much of this increase was due to use of high-priced Hepatitis C drugs Olysio, Sovaldi, and Harvoni, which became available starting in late 2013.

HCCI’s 2014 Health Care Cost and Utilization Report analyzes the health care spending trends for Americans younger than age 65 and covered by employer sponsored insurance (ESI) for the years 2010 through 2014, and provides a detailed look at components of health care cost growth for 2014. Over the five-year study period, per capita spending growth was relatively steady, rising between three and four percent in each year. In 2014, health care spending averaged $4,967 per person, up $163 (3.4 percent) from the year before. Out-of-pocket spending grew 2.2 percent to $810.

Hep C drugs drove higher spending on brand prescriptions

In 2014, spending grew fastest for brand prescriptions, with an increase of 8.2 percent ($45)—the largest increase in spending on brand prescriptions in recent years. By comparison, in 2012, spending on brand prescriptions declined by $3. Hepatitis C antiviral drugs accounted for $29.40 of the $45 increase. The average price per filled day (not including rebates, discounts or coupons) of Hepatitis C drugs was $983.30, compared to $38.30 for all other brand anti-infective medications. There were 30 filled days of Hepatitis C drugs per 1,000 individuals in 2014.

“It’s striking to see the impact high priced drugs can have on health care spending, particularly in the case of three Hepatitis C drugs, where use is relatively low,” said HCCI Senior Researcher Amanda Frost. “With more high-priced drugs set to enter the market, higher spending on brand prescriptions is a potential trend to watch.”

Use of health care services falling

Spending is influenced by both utilization and prices. In recent years, utilization of health care services has been declining, while the average prices have been rising. In 2014, the largest decline in use (-2.7 percent) was for acute admissions, which fell by 1 admission per 1,000 individuals. The smallest decline in use (-0.9 percent) was for outpatient visits, which fell by 3 visits per 1,000 individuals.

Other highlights

  • Prices increased for all services.The smallest average price increase was for professional services (3.1 percent), an increase of $3 per service. The largest average price increase was for acute inpatient admissions (4.6 percent), an increase of $831 per admission.
  • Out-of-pocket spending decreased for some services.Spending out of pocket on acute inpatient admissions (-$1) and on brand (-$9) and generic (-$4) prescriptions decreased by $14 per capita in 2014 compared to the previous year, while spending out of pocket on outpatient ($16) and professional ($15) services increased by a total of $31 per capita in 2014.
  • Women spending more out of pocket each year.Every year between 2010 and 2014, out-of-pocket spending was higher by women than by men. This difference grew every year, reaching $237 in 2014.
  • Gap in spending between young and old increasing. The difference in spending between the oldest and youngest age groups studied increased every year studied: from $6,281 in 2010 to $6,806 in 2014. In 2014, spending was $2,660 for children ages 0-18 and $9,466 for pre-Medicare adults, ages 55-64 (the oldest age group in HCCI’s dataset).

Editor’s picks:

Doctors say Affordable Care Act increasing costs

HHS announces $685 million to support clinicians delivering high quality, patient-centered care

SGR repeal emphasizes move to value-based payments









Try Premium Membership