Prices drove 90% of employer plan spending growth from 2019 to 2023, report finds
The Health Care Cost Institute's annual claims report found that people with job-based coverage used only slightly more care over five years, while the average price of that care climbed every year.
Health care spending for people with employer-sponsored insurance reached $6,743 per person in 2023, and higher prices accounted for almost all of the increase since 2019, according to the 2023 Health Care Cost and Utilization Report1 that the nonprofit Health Care Cost Institute (HCCI) released October 13. Rising prices explained $959, or 90%, of the $1,068 increase in per-person spending over the five years, the report found.
HCCI notes that higher costs push up insurance premiums and show up in out-of-pocket payments, so the source of the growth matters for what workers pay. Average prices rose 17.7% from 2019 to 2023, while overall use of services rose just 1.8%, HCCI found. From 2022 to 2023 alone, spending per person grew 6.5% while use of care was essentially flat and average prices rose 6.7%, according to HCCI's announcement2.
Hospitals are the largest piece. Hospital facility costs made up more than 46% of per-person spending in 2023, about $3,100 of the $6,743, according to the release. Inpatient admissions fell 10% over the period, which HCCI said likely reflects joint replacements and other orthopedic surgery moving to outpatient settings, yet inpatient spending per person still rose 6% because the average price of an admission climbed 18%. Average prices rose 12% for outpatient facility services and 11% for professional services, such as physician visits.
Prescription drugs grew fastest. Gross drug spending per person rose 40%, from $1,153 in 2019 to $1,613 in 2023, and point-of-sale prices rose 33%, the report found. Those figures do not subtract manufacturer rebates. Using Medicare rebate estimates as a stand-in, HCCI estimated that rebate-adjusted drug prices rose about 21% and net drug spending about 27%. The report noted that copays and coinsurance are calculated from pre-rebate prices, which is why the gross figures still shape what patients pay at the pharmacy.
The split between brand-name and generic drugs was wide. The point-of-sale price of a 30-day supply of brand-name drugs rose 59% from 2019 to 2023, while the price of generics fell 14%, according to the report. Gross spending on glucagon-like peptide-1 (GLP-1) drugs, used for diabetes and obesity, grew from $45 per person in 2019 to $197 in 2023. After HCCI's estimated rebates, net GLP-1 spending rose from $20 to $93 per person.
Patients' own payments grew more slowly than total spending. Average out-of-pocket spending was $923 per person in 2023, up 10.3% since 2019, and professional services accounted for close to half of it, HCCI found.
The report draws on medical and pharmacy claims for people younger than 65 with employer coverage, weighted to reflect the national employer-insured population by age, sex and geography. Its price measure is average spending per service, which is not adjusted for inflation or for changes in the mix of services. HCCI cautions that Black, American Indian and Alaska Native, and Hispanic people are underrepresented in employer coverage, and that the results do not describe people with Medicaid, Medicare or individual-market plans. The data also end in 2023, a lag HCCI attributes to the time it takes to collect and validate claims.
"Prices are the primary force behind high health care costs," Katie Martin, HCCI's president and chief executive, said in the release.
HCCI posts the data behind the report for download. On October 21, it announced3 that it will serve as the data and analytics partner for Peterson Health Analytics, a public-benefit company that plans to give employers comparable price, claims and quality data to use in contracting and benefit design.
