Health care spending rose steadily over the past decade, with spending increases found in most major categories of service, according to a new report in Health Affairs. The study, using claims data from the Health Care Cost Institute, found that total health spending per capita for enrollees in employer-sponsored insurance plans increased by 44 percent from 2007 through 2016.

The report looked at spending for four major service categories: inpatient hospital, outpatient facility, professional services, and prescription drugs. The research focused on spending on services rather than premium increases.

Overall the report finds an annual average per capita growth rate of 4.1 percent—although there was quite a bit of variation from year to year. In 2009, the growth rate was 6.3 percent; in 2014 it was 2.6 percent. Although the 44 percent growth over 10 years may seem dramatic, the annual health care spending increases are comparable to historic standards—a 2007 Health Affairs study found that the average rate of spending growth in the U.S. was 4.3 percent between 1970 and 2002.

The study's authors noted that the steady increase across all service areas is notable at a time of upheaval in the health care markets. The last ten years includes the implementation of the Affordable Care Act (ACA), by far the largest health reform legislation to be passed in decades.

“The past decade has been a transformational time in U.S. health care market with policy changes and innovation disrupting practice models and standards of care,” Niall Brennan, MPP, president and CEO of HCCI and one of the study's co-authors, said in a statement. “However, what is remarkable is that even within these dramatic changes, the share of spending across service areas has remained fairly consistent.”

The report found that prescription drugs were the area where spending increased the most. Other areas with higher rates of spending increases included emergency department visits and outpatient surgery. Spending on inpatient medical and surgical care dropped during the period, with the researchers suggesting that this may reflect an ongoing shift in care from hospitals to outpatient settings. The authors noted that the study was limited in some ways (for example, it did not include spending from public health plans), and called for more research to be done in this area.

“Health care expenditures are projected to continue to rise over the next decade, but without meaningful research on the health care utilization and spending trends for people with employer-sponsored health insurance—the single largest block of insured people in the country, it will be difficult to develop appropriate and effective policies,” said Brennan. “There is a need for more research on the health care trends in this population to understand the complex systems affecting the overall rising cost of U.S. health care.”

How are employers dealing with the increasing cost of health care?

Instant Insights /

Employer health spending increased 44 percent over a decade

More From HR Executive

Related Stories

Recommended For You