Spending on employee benefits grows, but at a sluggish pace

Spending on care for people with health insurance continues to grow, but at a slower rate so far in 2011 than in 2010, according to analysis from Thomson Reuters.

Thomson Reuters' Center for Healthcare Analytics in late July released its analysis of the first quarter of 2011. The company gathers claims data from its employer and health plan clients and comes up with a health care spending index, measuring per capita spending on drugs, physician services and hospital care. The numbers include what the employee and employer spend on care.

The overall annualized health care inflation rate for the first quarter was an estimated 3.8%, compared with an average 6.3% for all of 2010.

Physician services, at 3.2%, fell below the inflation rate. Hospitals, at 5.9%, were ahead of inflation.

Drugs, at 0.1%, saw almost no change.

Gary T. Pickens, PhD, chief research officer at Thomson Reuters, said it's too early to know whether health system reform is responsible for any part of the spending slowdown. "I think the most notable downtrend is the drug spending, and my suspicion is that has less to do with policy changes at the federal level and more to do with changes in drug benefits, and also the availability of generic substitutions," he said.

According to the Kaiser Family Foundation, growth in prescription drug spending has been slowing every year since 2000 except for 2006, when the Medicare prescription drug benefit took effect. Researchers attributed this to drug formulary design and the availability of generic drugs.

As measured by Thomson Reuters, spending on hospital care rose at a more rapid rate than for drug or physician services, a difference also reflected by data gathered by the Bureau of Labor Statistics.

The consumer price index for June, the most recent month available, was up 3.6% for all items compared with June 2010. The index for professional services, a category that includes physician care, rose by 2.3%, and hospital services increased by 5.5%.

The slowing growth in health care spending does not mean care is any more affordable, said Elise Gould, PhD, director of health policy research at the Economic Policy Institute, a think tank that focuses on the economic well-being of low- and middle-income Americans.

Workers are paying higher health insurance premiums, deductibles and other out-of-pocket costs, prompting them to delay or forgo care in many cases, she said. "Even if you're consuming the same amount of care, the insurance company is paying less out for it."

Some elements of health system reform that have yet to take effect are expected to help make health care more accessible and affordable, including state-based health insurance exchanges that are expected to launch in 2014. "The big changes we might see in the commercial market are going to happen in 2014," Pickens said.