July 8, 2015, Washington, DC—Spending on health care for children (ages 0–18) covered by employer-sponsored insurance (ESI) grew an annual average of 5.7 percent per year between 2010 and 2013, compared to 3.9 percent for the total population (ages 0–64) with ESI, finds a new report from the Health Care Cost Institute (HCCI).

In 2013, Rise in Spending on Inpatient Care and Higher Prices Drove Up Overall Spending, as Use of Prescriptions and ER Visits Declined

Per capita spending on children reached $2,574 by 2013, a $391 increase from 2010. The rise in children’s spending in 2013 occurred despite a drop in the use of prescription drugs and visits to the emergency room, demonstrating that rising health care prices were an important driver behind the spending increase. The report also showed growth in spending on children’s inpatient services, which contributed to the overall increase in spending.

Price Hike for Inpatient Care

Spending on inpatient admissions rose in 2013 as a result of rising prices and slightly higher admission rates for children—particularly newborns. The average price of an inpatient admission for a child increased by $744 in one year, hitting $14,685 in 2013. For infants and toddlers (ages 0–3), inpatient admissions accounted for about 40 percent of their per capita health care spending.

Decline in Prescription Use

For the first time in the study period, HCCI observed a drop in overall prescription use by children. This trend, along with a continued shift from the use of branded drugs to generics, meant spending on children’s prescriptions grew more slowly in 2013 than previous years. For example, between 2011 and 2013, use of generic prescriptions for medications commonly used to treat asthma and allergies rose by more than 300 percent for babies, more than 700 percent for younger children (ages 4–8), more than 800 percent for pre-teens (ages 9–13), and more than 500 percent for teenagers (ages 14–18). At the same time, use of branded versions of these drugs declined to nearly zero.

“We hope this report gives researchers, policymakers, and consumers a clearer picture of health care spending trends for children,” says HCCI Senior Researcher Amanda Frost. “While we know that prices have fueled much of the spending growth, future research should examine whether these expenditures are yielding valuable health outcomes and what the implications are for the future of children’s health care.”

Additional Report Highlights:

  • Decline in Emergency Room Visits: There were fewer emergency room visits in 2013 for all age-gender groups of children. The biggest decline was for teenage boys (a decline of 11 visits per 1,000 teen boys) and pre-teen boys (a decline of 8 visits per 1,000 pre-teen boys).
  • Teen Labor and Delivery Admits Declined, While Mental Health and Substance Use Admits (MH/SU) for Teen Girls Grew: For teenage girls in 2013, labor and delivery admissions declined, falling from 5 to 4 admits (rounded) per 1,000 girls. During the study period, the number of MH/SU admissions continued to rise, increasing by 1 admission per 1,000 teen girls in every year of the study period, reaching 13 MH/SU admissions in 2013.
  • Higher Spending for Boys: In 2013, per capita spending for children (ages 0-18) was $2,716 for boys and $2,426 for girls. However, when children reached their teens, spending on health care for girls was higher: $2,834 compared to $2,661 for boys the same age.
  • Lowest Spending for Younger Children (ages 4–8): Younger children had the lowest spending among the ESI population under 19, partially driven by the use of fewer medical services than the other children’s age groups. Spending on these children was $1,703 per child in 2013. This was $3,110 per child less than the spending on babies (ages 0–3).

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 2013.

The report Children’s Health Spending: 2010–2013 is available on the Health Care Cost Institute’s website at: http://www.healthcostinstitute.org/childrens-health-spending-2010-2013

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About the Health Care Cost Institute
The Health Care Cost Institute was launched in September 2011 supported by Aetna, Humana, Kaiser Permanente, and UnitedHealthcare to promote independent, nonpartisan research and analysis on the causes of the rise in U.S. health spending. HCCI believes an improved understanding of the forces driving health care cost growth will help policy makers, researchers, and the public make decisions that will lead to better and more accessible and affordable care. HCCI is governed by a board that includes distinguished economists, actuaries and health care experts. For more information, visit www.healthcostinstitute.org or follow us on Twitter @healthcostinst

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