By Amanda Frost, Eric Barrette, Kevin Kennedy, and Niall Brennan
Health Affairs, September 19, 2018
Using a national sample of health care claims data from the Health Care Cost Institute, we found that total spending per capita (not including premiums) on health services for enrollees in employer-sponsored insurance plans increased by 44 percent from 2007 through 2016 (average annual growth of 4.1 percent). Spending increased across all major categories of health services, although the increases were not uniform across years or categories. Growth rates for total per capita spending generally slowed after 2009 but increased between 2014 and 2016. Spending on outpatient services grew more quickly (average annual growth of 5.7 percent) compared to spending on the other types of services. However, the overall distribution of spending across categories remained largely unchanged. In the context of the dramatic economic and policy events that have taken place since 2007—including the Great Recession, the Affordable Care Act, and numerous medical innovations—this assessment of ten-year spending trends provides insights into how the largest insured population in the US contributes to health care spending growth.
By Don McCanne, M.D.
Previously much of our access to data on health care spending has been through government programs – Medicare and Medicaid. Data on commercial insurance spending, especially employer-sponsored plans, were hidden in a cloud of secrecy as proprietary information. Now a group of major insurers has made that information available though the Health Care Cost Institute. Having this information is helpful because it can reveal underlying health care spending trends in the very large sector of commercial insurance (covering 54 percent of Americans) that was not disturbed by the Affordable Care Act (ACA).
In the decade that included the Great Recession and the enactment and implementation of ACA, there was an initial slowing in the rate of health care spending increases. The ACA enthusiasts were quite willing to take credit for that slowing, though there was not much evidence that the specific polices contained in ACA could be credited for it. It seemed much more likely that the slowing in health care spending growth was merely a manifestation of the global slowing of the economy during the recession.
In the latter part of the decade studied, health care spending growth increased again. Although ACA is still in force, this increase further suggests that the previous slowing was due to the recession and not due to any magical policies contained in ACA. In fact, many other studies have demonstrated disappointing results in the ACA measures that were supposedly designed to contain spending.
The significance of this is that it is wrong to continue to support ACA based on the concept that we merely need to give it more time to work, maybe while adding a public option – an option that would not change in any fundamental way the huge, highly dysfunctional, fragmented infrastructure of our health care financing system. It is wrong to reject a proven model that would be effective in reducing the rate of spending increases to sustainable levels – a single payer national health program.
Now that we have opened the Pandora’s Box of private commercial insurance data, we have confirmed that private insurance is not capable of containing the excessive growth in health care spending. So let’s move forward with establishing our own public program that would work – a single payer improved Medicare for all.
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