Who Knew? Patients' Share Of Health Spending Is Shrinking
By Jay
Hancock
KHN Staff Writer
Jan 13, 2013 - Kaiser Health News
Consumer-driven medical spending may be the second-biggest story in health
care, after the Affordable Care Act. As employers give workers more "skin in the
game" through higher costs from purse and paycheck, the thinking goes, they'll
seek more efficient treatment and hold down overall spending.
But consumers may not have as much skin in the game as experts thought, new
government figures show.
Despite rapid growth in high-deductible health
plans and rising employee contributions for insurance premiums, consumers' share
of national health spending continued to fall in 2011, slipping to its lowest
level in decades.
"I'm surprised," says Jonathan Gruber, a health economist at the
Massachusetts Institute of Technology. "All the news is about the move to
high-deductible health plans. Based on that logic c I would have expected it to
go up."
True, medical costs are still pressuring families. Household health expense
has outpaced sluggish income growth in recent years, says Micah Hartman, a
statistician with the Department of Health and Human Services, which calculates
the spending data.
But from a wider perspective, consumer health costs continued a trend of at
least a quarter-century of taking up smaller and smaller parts of the
health-spending pie. Household expense did go up. But other medical spending
rose faster, especially for the government Medicare and Medicaid programs.
Economists measure three kinds of consumer health costs: insurance premiums
paid through payroll deductions or for individual policies; out-of-pocket costs
for deductibles and co-pays; and Medicare payroll taxes. Such outlays fell to
27.7 percent of the health care economy in 2011, down from 28 percent in 2010
and from 32 percent in 2000, according to the national health expenditures report issued by HHS last week.
That's in spite of the fact that one worker in three is covered by a plan
with a deductible of at least $1,000, up from one in 10 in 2006, according to the Kaiser Family Foundation. (KHN is an
editorially independent program of KFF.) Among small firms, half the workers are
now in high-deductible plans.
One factor holding down costs even for families with consumer plans has been
patent expirations for expensive, commonly used medicines such as Prevacid and
Flomax.
"People these days are spending a lot less out-of-pocket on prescription
drugs," said Peter Cunningham, director of quantitative research at the Center
for Studying Health System Change. "A lot of that has to do with the shift from
brand name to generics."
Nobody thinks consumer-driven medicine has run its course. Insurers and
employers are still building tools for patients to shop for care by comparing
costs for MRI scans, for example, or researching hospital quality records.
High-deductible plans are expected to win a large share of the business sold
next year through the health law's state insurance exchanges. Many companies say
they intend to offer high-deductible insurance -- especially plans with
tax-favored health savings accounts -- as the only option.
"I've heard of nothing but acceleration" of employers into consumer-directed
health insurance, said Roy Ramthun, a benefits consultant who was a senior
health policy advisor in President George W. Bushfs administration. "More local
units of government, school districts and even some union plans are starting to
move more aggressively into these areas."
High deductible plans are already getting credit for helping with an overall
slowdown in medical spending growth. Among other factors, economists suspect
that the prospect of higher wallet costs has made consumers even more likely
than usual to avoid doctor visits in the middle of a sluggish economy. (Public
health officials fear this will backfire with a later spike in illness.)
Sooner or later, householdsf share of the medical-cost pie will start to get
bigger, analysts say. The declines have been getting smaller, suggesting the
trend will reverse.
One reason is continued growth of high-deductible plans. Another is that,
starting in 2014, the health act requires individuals to start buying coverage
or pay a penalty. Another is that federal health spending has risen more than
three times as fast as consumer health spending since 2007, which canft
continue.
Even with recent tax increases on high-income households, the huge Medicare
program for seniors and the disabled is growing at an unsustainable pace, says
Joseph Antos, a health economist at the pro-markets American Enterprise
Institute. That means Medicare, too, will need to seek higher premiums,
deductibles or co-pays from the patientfs pocket, he said.
"Medicare is on a fiscal slide," he said. "Things are going to have to
happen. Eventually, whether you call it premium support or not, wefre going to
have to move to some kind of budgeted system in Medicare."
© 2013 Henry J. Kaiser Family Foundation. All rights reserved.