NIHCM Foundation Data Brief: Rising Prices Lead to Higher Premiums

A new data brief from the National Institute of Health Care Management Foundation looks at spending for private health insurance, finding that “97 percent of the rise in premium spending between 2006 and 2010 was due to growth in insurers’ spending for health care services for their enrollees.” AHIP has developed an infographic showing the five most expensive treatments in 2011.

From the brief:

  • “Analysis of the NHEA data by staff from the Office of the Actuary  shows, for instance, that changes in medical prices explained almost 75 percent of the change in total personal health care spending in the U.S. between 2009 and 2010, up from about 45 percent of the total change between 2000 and 2006 and from about 55 percent over the 2007 to 2009 period.”
  • “Milliman’s analysis of data for their 2011 medical index found that unit price increases in the inpatient, outpatient, pharmacy and physician sectors accounted for most of the growth in spending between 2010 and 2011,while their 2012 report noted ongoing increases in the cost of an inpatient day but no growth in utilization.”
  • “Across all types of services considered, across all four annual periods, and across a variety of private payers, rising prices accounted for the majority of the higher spending.”
  • ” The single largest contributor to higher premium spending was the hospital sector, where insurers paid out $48 billion more in 2010 than they had just five years earlier.”
  • “Indeed, rising aggregate payments to providers were responsible for 97 percent of the increase in national spending on private premiums over the past five years, with burgeoning payments to hospitals, physicians and laboratories accounting for more than 70 percent of the higher spending.”

AHIP’s iPad app, U.S. Health Care Spending 101, examines the history, components, and sources of spending for the largest sector of the American economy. Based entirely on federal data, the app provides the facts on more than 50 years of health care expenditures as well as projections of future spending growth.

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