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Health care costs grow despite decline in use of services

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Health care spending for U.S. individuals with employer-sponsored health coverage continues to grow steadily, despite the declining use of health care services, according to a report released Thursday.

The new study by the Washington-based health research group Health Care Cost Institute found that health care spending for privately insured individuals younger than 65 increased 3.4% in 2014, compared with 3.0% in 2013.

In 2014, health care spending averaged $4,967 per person, up $163 from the year before, HCCI found.

Out-of-pocket spending for deductibles, co-insurance and copayments grew 2.2% to $810 per person, the report said.

For the study period of 2011 to 2014, growth in health care spending held steady between 3.0% and 4.0% each year.

The steady growth in spending is “due to declining usage over most services including brand prescriptions, while at the same time we're seeing increasing prices, and so those two are sort of offsetting each other,” said Amanda Frost, senior researcher with HCCI and lead author of the report.

In 2014, spending on prescription drugs grew faster than any other medical service. Spending on brand-name prescriptions grew the fastest at 8.2% to $593 per capita, even though use of such drugs declined 15.6% in 2014.

Expensive hepatitis C drugs Olysio, Sovaldi and Harvoni largely drove the increased spending on brand-name prescriptions, HCCI said. For example, the average price per filled day of hepatitis C drugs totaled $983.30, compared with $38.30 for other brand-name anti-infective medications, according to the report.

Spending for generic prescription drugs grew 6.5% to $306 per capita in 2014. Utilization for generic drugs — the only health service studied that saw an increase in use in 2014 — grew 3.1%, HCCI found.

HCCI said in the report that “the larger spending growth for prescriptions, as compared to the other service categories, largely contributed to the stable rate of overall spending growth observed in 2014.”

Spending per capita for outpatient visits increased 4.7% in 2014 to $871 per capita, and spending on inpatient visits reached $999 per capita, up 1.7%.

According to the report, spending by insurers accounted for the largest percentage of total health care spending per capita for individuals with employer-sponsored coverage at 84.7%. Spending by insurers increased 3.6% per capita to $4,157 in 2014.

Prices and utilization

All health care services studied saw increases in their average prices in both 2013 and 2014, according to the report.

At the same time, utilization decreased for all services except generic prescriptions.

The average price for acute inpatient admissions, including medical, surgical, labor and delivery, newborn, and mental health and substance abuse admissions, increased the most at 4.6%, or by $831 per admission.

Yet utilization of acute inpatient admissions declined the most of all health services at 2.7%, according to HCCI.

The average price for professional services, which include services such as the administration of drugs, office visits to primary care providers and specialists, and pathology and laboratory services, increased the least at 3.1% in 2014, or by $3 per service.

Outpatient visits experienced the smallest decline in use at 0.9%.