Healthcare Cost Increases Driven by Prices, Not Worker Usage, Study Finds
A new Health Care Cost Institute (HCCI) report reveals that 90 percent of the rise in employer healthcare costs stems from price increases by providers, not increased utilization by employees.
Rising healthcare costs for employers are primarily driven by price hikes from healthcare providers, rather than increased service utilization by employees, according to a new report from the Health Care Cost Institute (HCCI). The analysis, covering data from 2019 to 2023, found that employer healthcare outlays increased by nearly 19 percent during this period, with 90 percent of that rise attributed solely to escalating prices.
The study contrasts this with a modest increase of only about 2 percent in the use of medical services by workers over the same timeframe. HCCI's examination of the data showed total spending climbing from $5,676 to $6,743, with the vast majority of this increase explained by higher average prices charged by the healthcare sector.
Average prices saw annual growth ranging from 2 percent to 7 percent, while the utilization of services remained largely flat or slightly decreased. The research highlights that inflated prices from hospitals, treatment providers, pharmaceutical companies, and intermediaries are the most significant factor behind the escalating expenses faced by employers.
The high cost of the U.S. healthcare system is attributed to complex intermediaries, administrative systems, and regulations. The report also notes that the U.S. spends significantly more per capita on healthcare than other OECD countries, yet health outcomes are not proportionally better, with the U.S. underperforming in key metrics like life expectancy and infant mortality.