Price Hikes Fuel Rising Employer Health Costs
A Conversation with Aditi Sen, PhD
October 5, 2021
A new report from the Health Care Cost Institute (HCCI) finds health care spending rose more than 20% between 2015 and 2019 for people with employer-sponsored insurance. HCCI’s latest Health Care Cost and Utilization Report provides a unique look at the health care trends affecting the roughly 150 million Americans who get coverage through work.
We wanted to give you a first look at the findings and a chance to hear more from one of the report’s authors. Below is a short conversation with economist and HCCI’s Director of Research and Policy Aditi Sen. (We conducted this interview by email and have edited it for length and clarity.)
Tradeoffs: Your new 2019 Health Care Cost and Utilization Report looks at health care spending, utilization and average prices from 2015 through 2019 for about 55 million people enrolled in employer-sponsored plans.
What’s your biggest takeaway from this report?
Aditi Sen: Between 2015 and 2019, average annual health care spending for individuals with employer-sponsored insurance grew 21.8%, topping $6,000 per person for the first time in 2019. This includes the amount payers (either an insurance company or employer) and patients spent on both medical and prescription drug claims. It does not include insurance premiums. Our report’s most important takeaway is that this spending increase was driven largely by health care prices, rather than by how much care people are getting.
Over this period, prices rose every year for hospital services, physician services and prescription drugs. In comparison, utilization of health care services grew much more slowly (and even declined slightly in 2019).
Here’s one remarkable data point that gets at this trend: Prices for inpatient hospital admissions grew about 30% over this five-year period while utilization of inpatient hospital services dropped 12.5%.
Tradeoffs: Some people might think data from 2019 has been rendered kind of irrelevant by COVID. What value do you believe this report has?
Aditi Sen: To comprehend fully how COVID has changed the U.S. health care system, we need to understand where it was before. By describing health care spending, prices and utilization on the eve of the pandemic, this report helps provide that important baseline — at least in the employer market.
Second, this report highlights the role of rising prices as the main driver of growing health care spending. These numbers are necessary for policymakers, payers and others seeking to make health care more affordable for Americans. Relatedly, this is the first Health Care Cost and Utilization Report to feature data from HCCI’s updated dataset.
Tradeoffs: Speaking of the dataset, we know the nation’s largest insurer, UnitedHealthcare, is no longer sharing its data with HCCI. What else is new and different about the data this report is based on?
Aditi Sen: The updated HCCI dataset used in this report — and now available to academic, nonprofit, government and other researchers — includes claims data on one-third of the U.S. population with employer-sponsored insurance. Our previous dataset only covered about one-quarter of that population. So we’re excited about the breadth and depth of this new version, which includes data from more than 30 Blues plans, Aetna and Humana. Researchers can get a granular look at health care spending and use by zip code as well as at the level of the individual patient and provider. This year we’ve also made available a range of resources (code, supplemental data, population weights, etc.) that we hope will make research using the HCCI data more efficient and informative.
Tradeoffs: What are a couple of questions not answered by this report that you’re hoping HCCI or other researchers use your data to answer in 2022 or beyond?
Aditi Sen: There are many timely and important questions that these data can help us answer, including how COVID is impacting health care costs and services (e.g., the growing use of telehealth), what effects private equity investment is having on health care, and how trends in pharmaceutical markets influence the cost of prescription drugs. Building directly on this report, we see some interesting potential patterns emerging in 2019 — such as a flattening out of average out-of-pocket spending — that we look forward to exploring further in our future analyses of 2020 and 2021 claims data.
Because health care claims data for those with employer-sponsored coverage have historically been hard to obtain, there is so much we still don’t know about this huge and important market. We hope that by making this robust claims dataset more accessible to researchers and policymakers, we will all learn more about this market and how to make it work better for the millions of Americans who depend on it for their health care.
For additional reporting on the employer-sponsored insurance market and its challenges, check out two recent Tradeoffs episodes: “The High Price of Lowering Health Costs for 150 Million Americans” and “Inside Big Health Insurers’ Side Hustle.”