Consumer's share of U.S. health outlay drops
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It might be small comfort for those buried under medical bills, but the consumer's share of the total U.S. health care outlay is actually dropping, according to government spending statistics.
This, despite a decade of drifting toward higher-deductible plans, higher co-pays, health savings accounts and other defined benefit plans, all designed to insulate employers from rising costs and give consumers more "skin in the game" and thus more impetus to shop wisely and -- in theory -- cut medical expenses.
Indeed, private employers have shifted some expense to employees and their families, but employer-provided health plans cover only half of U.S. population. The rest are covered by individually purchased plans, Medicare or Medicaid -- or aren't covered at all.
Add it all up and the consumer share of the nation's total health care spending has dropped slightly to 27.7 percent in 2011, down from 32 percent in 2000, even as the total cost of care continues to rise.
That means the rest of the payers -- especially state and federal governments -- are picking up more of the nation's $2.7 trillion medical bill.
The consumer's share, according to calculations made by the U.S. Department of Health and Human Services, is made up of three major categories: insurance premiums, co-pays and out-of-pocket deductible costs and Medicare payroll taxes.
While the consumer's share of the total bill may be smaller, that's not to say that health care costs are going down. Household health expenses are still growing at a rate that outpaces income growth, especially since the recession. Prior to the recession, household health spending accounted for 6 percent of income. It's been creeping up since then.
Out-of-pocket spending growth slowed during the recession.
Prescription drug costs, for example, have moderated over the last six or seven years, said Peter Cunningham, director of quantitative research at the Center for Studying Health System Change in Washington, D.C.
Insurers pushing patients from brand name drugs to generics; retail chains selling $4 prescriptions as loss-leaders; Medicare adding a prescription benefit a decade ago where none had existed before for seniors; patents expiring on some popular brand-name medications -- all of those factors have had the effect of reducing the consumer's share of the drug bill.
"Maybe at first it seems a little bit surprising," Mr. Cunningham said. "They're kind of countervailing trends. ... Purchasers are trying to push some costs onto workers," while insurers and state-level payers themselves are actually broadening benefits, adding, for example, comprehensive mental health coverage, something that was sporadic before the 1990s.
In other words, "Everybody is paying more," he said.
Since 2007, he said, federal health spending has grown three times faster than consumer health spending.
"The government share has increased through the recession, specifically the federal government," said Micah Hartman, statistician with the U.S. Centers for Medicare and Medicaid Services.
But what of the private employer insurance market, the avenue through which much of the under-65 population still gets its health insurance?
In 2000, employers paid for 74.7 percent of the employee's health insurance premiums. By 2011, that number was down to 70.6 percent -- suggesting that employers' efforts to push more cost onto employees are having the desired effect.
And employers have also had success at getting employees to take on higher deductibles, in addition to those higher premiums. The Kaiser Family Foundation, which tracks health trends and statistics, says that today one in three workers has a plan with a deductible of at least $1,000, which is up from one in 10 in 2006.
The 2010 Affordable Care Act has the potential to disrupt many of the spending trends seen over the last decade. Medicaid spending is expected to increase, because part of the Act directed states to expand the pool of residents financially eligible for Medicaid benefits. And in 2014, the Act also requires those without insurance to buy a plan, or pay a penalty -- which should increase the consumer's total health outlay.
First Published January 31, 2013 12:00 am