Healthcare costs are rising, but what’s increasing most should make employers take note

March 12, 2020

Vitality contributed to new research published in JAMA, by the Institute for Health Metrics and Evaluation (IHME). The study, US Personal Health Care Spending by Payer and Health Condition, 1996-2016, analyzed U.S. healthcare spending by medical condition for the past 20 years. Over this period, health spending has significantly increased, now accounting for 17.9% of the U.S. economy.

The research examined health spending of three types of payers — public insurance, private insurance and out-of-pocket payments — by health condition, age group, gender, and type of care for 1996 through 2016. This is valuable data for employers as it offers insight into where they can make the greatest impact to control health insurance costs and ultimately the health and well-being of employees and their families.

Study findings include:

  • Total healthcare spending increased from an estimated $1.4 trillion in 1996 (13.3% of GDP) to an estimated $3.1 trillion in 2016 (17.9% of GDP)
  • For health spending by payer, private health insurance in 2016 accounted for 57%, public insurance for 34% and out-of-pocket spending by individuals was 9%
  • Throughout the 20 years from 1996 to 2016 private spending and total spending both increased at 2.6% per year more than inflation
  • The largest source of spending by private health insurance in 2016: low back and neck pain ($76.9 billion), other musculoskeletal disorders ($73.3 billion), pregnancy and postpartum care ($52.8 billion), skin and subcutaneous diseases ($49.3 billion), and diabetes mellitus ($49.1 billion)
  • Of the health conditions with the highest spending in 2016 all experienced historical annual spending increases higher than the overall average of 2.6%.

While this is quite a bit of data, we continue to support this research to ensure that we help our clients better understand and manage the health conditions that matter most to control healthcare spend. For example, many of the conditions that increased most, such as diabetes and back pain, are in part related to lifestyle choices. A future study will focus on more on these dimensions.

The analysis has received significant media coverage which can be found here: https://jamanetwork.altmetric.com/details/76995402/news. Detailed data can be explored and visualized on the IHME website: https://vizhub.healthdata.org/dex/.

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