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U.S. medical costs and spending are on the rise

Friday, May 02, 2014 by: David Gutierrez, staff writer
Tags: medical costs, healthcare spending, insurance coverage

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(NaturalNews) Following several years of slowdown, use of healthcare services has begun to increase again in the United States, possibly portending large increases in costs and spending.

The findings come from an April 15 report from the IMS Institute for Healthcare Informatics, which analyzes medical and prescription drug use trends for the medical and pharmaceutical industries.

"2013 was a rebound year for healthcare," said IMS executive director Murray Aitken. "We saw healthcare usage overall up for the first time in three years. We think that is reflective of a strong economy, more patients with insurance and also some pent-up demand for services that may have been delayed or deferred since the economic downturn."

Doctor visits, prescriptions, hospitalizations increase

Between 2009 and 2012, U.S. healthcare spending grew at the slowest rate in 50 years, less than 4 percent annually. This decrease in spending rate has been attributed to a variety of factors, primarily to people putting off medical care in light of the economic recession. Some analysts have also suggested that changes in healthcare delivery and reimbursement from the Affordable Care Act also led to a decrease in the rates of medical costs and spending.

While total medical spending has not dramatically increased, several other markers of medical expenditure have, suggesting that a surge in spending may be around the corner. For example, pharmaceutical drug spending increased 3.2 percent last year, following a 1 percent decrease the year before.

The number of hospitalizations, prescriptions filled and doctor visits also increased. Visits to primary care physicians dipped slightly (by less than 1 percent), but visits to specialists increased by 5 percent. Hospital visits also increased, especially outpatient visits by commercially insured patients. Emergency room visits leading to hospitalization dropped by a dramatic 14.6 percent, which may suggest that many people were using emergency rooms for non-emergency services.

Due in part to a large number of patents expiring on pharmaceutical drugs, prescription drug expenditure grew much more slowly than prescription drug use. According to the IMS report, 57 percent of all prescriptions filled in 2013 cost patients just $5 or less. However, the costs of the other 43 percent remained substantial, particularly for specialty drugs treating chronic conditions such as cancer.

Costs to rise further

Many analysts predict that the uptick in medical use is a sign that large cost and spending increases are imminent. According to David Gruber, director of healthcare research at Alvarez & Marsal, factors leading to increased medical usage include aging Baby Boomers, newly insured patients under the Affordable Care Act and people seeking medical care that they put off during the recession.

"At some point you can't defer anymore," Gruber said. "[Spending] isn't going up by double digits, but it could spike to 6% or 7%."

Such an increase would hit workers particularly hard, as employers continue shifting a greater proportion of healthcare costs to their employees in the form of higher premiums.

In addition, costs of prescription drugs are expected to continue increasing as new specialty drugs come to market. One such drug, the hepatitis C drug Sovaldi from Gilead Sciences, has been criticized for its cost of $84,000 for a 12-week treatment.

Analysts also worry that doctors and physicians may raise costs in light of an increased demand for services.

"Many exchange health plans got better discounts than anticipated from providers, but there is really a strong pushback now from hospitals and physicians who are concerned about having enough money to cover their costs," said Los Angeles-area actuary David Axene. "I hope we can stay south of double digits, but there's no guarantee we will."

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