Report: Medical Care Spending for Employees Rose 4.6% Last Year

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Spending on medical care for Americans with job-based insurance rose 4.6 percent last year, driven mainly by higher prices charged by hospitals and other medical providers, according to a new report.

The growth came despite a sluggish economy which some economists thought would translate into more modest spending growth. Still, last year’s per enrollee increase ranks below the 5.8 percent increase in 2009, according to the Health Care Cost Institute, a nonpartisan research group funded by insurers.

It isn’t clear from the data whether last year’s uptick represents a return toward the higher averages of the past – or whether it was an anomaly within a general slowdown, said David Newman, executive director of the institute. The institute noted the 2010 slowdown in its first report, which documented a 3.8 percent spending increase for privately insured Americans that year.

Data comes from actual claims paid by insurers

The current report found that employers in the Northeast spent the most on health care last year, at $4,659 per enrollee, while those in the West had the lowest tab at $4,358.

The data are based on 6 billion actual claims paid by insurers covering about 40 million people, representing one of the broadest looks at spending by employers for medical services. The data do not include spending for people covered by Medicare, Medicaid, or for those who buy their own coverage.

The data – available for free to researchers, employers and consumers – can help those who negotiate for health coverage “to ask what justifies price increases that are two and three times inflation,” says Newman.

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Slowdown in medical spending impacts costs

While the Consumer Price Index rose 3.2 percent between 2010 and 2011, for example, the average price for inpatient hospital care rose 5.3 percent. That increase occurred as admissions declined half a percentage point, the study found.

Reports by other organizations released this year showed that the overall slowdown in medical spending seen in the past few years has had an impact on insurance costs.

Premiums rose for employers at moderate rates by historical standards, according to a report out earlier this month by the Kaiser Family Foundation. That report found that premiums rose, on average, 4 percent for family coverage in 2012, well below last year’s 9 percent increase and half the 8 percent average of the previous decade. (Kaiser Health News is an editorially independent program of the foundation.)

This article was reprinted from with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

Julie Appleby reports on the implementation of the health care overhaul law, the interplay of health care treatments and costs, trends in health insurance, and policy issues affecting hospitals and other medical providers, for Kaiser Health News. Contact her at