A new report on health spending by Americans

By Dr. Ananya Mandal, MDMar 3 2020

There have been several studies showing that spending on health by Americans is on the rise, and around 18 percent of the US economy is individual spending on health. A study titled, “US Health Care Spending by Payer and Health Condition, 1996-2016,” was published in the latest issue of JAMA today.

How does spending on different health conditions vary by payer (public insurance, private insurance, or out-of-pocket payments) and how has this spending changed over time? Image Credit: Hurst Photo / Shutterstock

What the study spoke about?

Researchers wrote that there had been a sharp rise in health by the payers. This study was conducted to assess the different spending on health by payers and the variations over time in this spending. The objective of the study was to assess the spending on three major types of payers – public insurance (such as Medicare, Medicaid, and other government programs), private insurance companies, and “out-of-pocket payments.”

What was done?

For this study, the team of researchers delved into detailed databases such as those from insurance claims, government budgets, facility records, surveys from households, and official records between 1996 and 2016. Estimated spending for 154 different health conditions were assessed. Growth rates and rise in spending for each type of population and age groups were calculated for each of the three types of payers and associated health conditions. The researchers looked at levels of inpatient care, ambulatory care, care in nursing facilities, stay in the facilities, dental care, care in the emergency departments, purchase of pharmaceuticals and medicines from retail outlets associated with the health conditions studied.

Results

The researchers classified the different rates of spending and the associated health conditions from all types of payers. Some of the factors considered in the classification included age group, gender, type of care sought, type of payer; these were calculated for each of the years studied.

Results revealed that there was a total of $1.4 trillion in spending in 1996, which was 13.3 percent of gross domestic product [GDP] and was estimated to be $5,259 per person. These numbers rose to $3.1 trillion in 2016, which was 17.9 percent of GDP and came to about $9,655 per person. This study could garner information about 85.2 percent of the expenditure. Further, the team also noted that in 2016 there was 48 percent spent on health, which was paid by private insurance. A further 42.6 percent and 9.4 percent were paid by public insurance and out-of-pocket payments, respectively, they added. In 2016, most was spent on low back, and neck pain among the 154 conditions studied, leading to an expense of $134.5 billion. Of these billions of dollars spent on back, and neck pain, 57.2 percent, 33.7 percent, and 9.2 percent were paid respectively by private insurance, public insurance, and out-of-pocket payments.

Second on the list of health conditions came other muscle pains and conditions with an expenditure of $129.8 billion in 2016, and 56.4 percent of this was spent by private insurance.

Diabetes was third on the list of expensive health conditions with an expenditure of $111.2 billion and 49.8 percent spent by public insurance. Next expensive conditions were heart disease ($89.3 billion), falls ($87.4 billion), urinary conditions ($86.0 billion), skin and subcutaneous conditions ($85.0 billion), osteoarthritis ($80.0 billion), dementias ($79.2 billion) and hypertension or high blood pressure ($79.0 billion).

When looking at the type of care received and the age of the payer, it was noted that the largest spenders on low back or neck pain or other musculoskeletal diseases and diabetes were between the ages of 20 and 64 years.

Spending on dementias rose among those aged above 65 years.

Private insurances were paying the most for skin and subcutaneous diseases, low back and neck pain, and other muscle disorders. Public insurances were funding conditions such as high blood pressure, dementia, ischemic heart diseases, wrote the researchers. Out-of-pocket payments were most for dementias, the researchers noted.

Inpatient care costs were most for osteoarthritis, and ischemic heart disease and ambulatory care costs were most significant for musculoskeletal disorders, high blood pressure, low back, and neck pain, skin, and subcutaneous diseases, and urinary disorders. Diabetes raised costs of pharmaceuticals purchased from retail outlets and dementias increased spending on nursing care facilities. Falls were the cause of expenditure on all types of care.

Overall the rise in the expenditure by the public insurance was 2.9 percent a year, private insurance at 2.6 percent a year, and out-of-pocket payments at 1.1 percent a year.

Importance and future directions

According to the researchers, there has been a significant increase in US expenditure on health between 1996 and 2016. Public insurance was paying the most. They concluded, “Although spending on low back and neck pain, other musculoskeletal disorders, and diabetes accounted for the highest amounts of spending, the payers and the rates of change in annual spending growth rates varied considerably.”