News Brief: Rising Prices Drive Health Spending Growth, First HCCI Report Finds

Carnegie Mellon Professor Leads Charge To Help Solve Health Care Cost Problem

Contact: Ken Walters / 412-268-1151 / walters1@andrew.cmu.edu

Rising prices for care were the chief driver of health care costs for privately insured Americans in 2010, according to the first report from the newly formed Health Care Cost Institute (HCCI), led by Martin Gaynor, the E.J. Barone Professor of Economics and Health Policy at Carnegie Mellon University's H. John Heinz III College. The per capita spending on inpatient and outpatient facilities, professional procedures and prescription drugs rose 3.3 percent in 2010 for beneficiaries under age 65 with private, employer-sponsored group insurance. HCCI data show that this 3.3 percent increase follows spending increases in 2008 (6 percent) and 2009 (5.8 percent).

Hospital and ambulatory care facility prices rose by 5.1 and 10.1 percent, respectively, in 2010. Increases in facility prices were offset by decreases in the number of inpatient admissions (-3.3 percent) and use of outpatient facilities (-3.1 percent). HCCI confirmed 2010 prices for the privately insured grew more than utilization after accounting for changes in the mix of medical services provided in hospitals (0.7 percent) and outpatient facilities (4.6 percent).

The Health Care Cost and Utilization Report: 2010 is based on de-identified, Health Insurance Portability and Accountability Act (HIPAA) compliant data sets from three billion health insurance claims provided by Aetna, Humana and United Healthcare, three of the nation's largest health plans. Future reports from HCCI will include data from Kaiser Permanente. The payers have agreed to share their data with HCCI to help researchers study what influences the use and cost of health care services in the United States. Findings from the 2010 report reflect the national health care spending of more than 33 million privately insured people with employer-sponsored group health insurance.

"For the first time we have comprehensive data on the privately insured. This lets us develop a clearer picture of what is truly driving health care spending in the United States," says Gaynor, the HCCI Governing Board Chairman. "Health care spending is a critical problem — it's not an exaggeration to say that if we solve the health care spending problem we solve our fiscal problems."

Watch a video of Gaynor talking about the report at: http://vimeo.com/42405182