New Report Points to Price Hikes for Prescriptions Drugs, Hospital Stays, and ER Visits;
Examines State Trends in Spending for Children’s Health Care

May 16, 2016 – Rising prices were the chief driver of growth in spending for children’s health care in 2014, finds a new report from the Health Care Cost Institute (HCCI). A widespread drop in children’s use of medical care that same year—a relatively new trend in HCCI’s reporting—saw decreases in doctor visits, ER visits and hospital admissions, and lower prescription drug use, particularly for anti-infective drugs such as penicillin among younger children and babies.

Per capita spending on health care for children covered by employer-sponsored insurance (ESI) grew an annual average of 5.1 percent per year between 2010 and 2014, reaching $2,660 in 2014. At the same time, there was a general decline in the use of health care services between 2012 and 2014. Out-of-pocket spending on children increased an average annual 5.5 percent, to $472 in 2014. This growth was due in part to higher out-of-pocket spending on ER visits, which increased an average annual 11.7 percent or $21 per capita.

“The decline in children’s use of health care services is a relatively new trend that we need to continue monitoring,” says HCCI Senior Researcher Amanda Frost. “While we know that prices have fueled much of the spending growth in 2014, future research should examine whether these higher expenditures are leading to better health care outcomes for children.”

For the first time, HCCI examined children’s health care spending trends at the state level, reporting on Arizona, Connecticut, Florida, Illinois, Maryland, Ohio, Texas, Virginia, and Wisconsin, as well as the District of Columbia (DC). Among the states studied, Arizona had the lowest per capita spending ($2,151 per child in 2014), while Wisconsin had higher per capita and out-of-pocket spending than the national average in every year studied – reaching $3,017 per capita in 2014, and $577 in out-of-pocket costs. In 2014, DC had the highest rate of spending ($3,040 per capita), but lowest out-of-pocket payments ($362). High spending in DC was in part driven by an increase in the number of hospital admissions for sick newborns. Additionally, DC had the most ER visits as compared to the other states examined.

Additional Key Findings:

Prices for Brand Prescriptions More Than Doubled. Between 2010 and 2014, the average price per filled day for brand prescriptions more than doubled (from $7 per filled day in 2010 to $16 per day in 2014). As observed among other health care services, increases in spending were driven by the rise in the average price per filled day of a brand prescription, rather than use. In 2014, per capita spending for brand prescriptions rose 6.8 percent, the fastest spending growth rate for any service category that year. For generic prescriptions, the average price per filled day remained stable at $2 across all years studied.

Price Hike for Surgical Admissions. One influence on the increase in spending on acute inpatient admissions over they study period was the rising price of surgical admissions. In 2010, the average price of a surgical admission for a child was $35,423, and by 2014 it was $53,372 – a more than 50 percent price increase.

ER Prices Went Up, But Use Dropped. ER visits comprised eight percent of total health care spending per capita for children in 2014. Spending increased from $165 per capita in 2010 to $214 in 2014. The average price of an ER visit increased by $298 between 2010 and 2014. At the same time, the number of ER visits dropped from 181 in 2010 to 177 ER visits per 1,000 children in 2014.

Doctor Visits, The Most Common Service For Children, Declined. Going to the doctor was the most widely used health care service for children. In 2014, there were 3,228 doctor visits per 1,000 children, down slightly from the previous year. Doctor visits accounted for 12 percent of the total per capita spending in 2014 ($339 per child), and was the largest share of health care spending for the average child.

“In 2014, growth in health care spending was largely due to rising prices,” says HCCI Executive Director David Newman. “We hope policymakers, providers, and payers use this report to improve health care for kids.”

The report presents the most up-to-date information on health care spending trends for privately insured children under age 19. It is based on fee-for-service claims for 10.2 million children per year who were covered by ESI. About half of the children in the United States were covered by ESI in 2014.

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