Private health insurance spending surged $101 billion between 2016 and 2018, according to new research out this fall. Hospital care and emergency services accounted for the largest share of that increase — 42 percent.
Spending on hospital and emergency care is rapidly rising because our nation’s epidemic of chronic disease is growing worse. As the prevalence of chronic disease continues to rise, so too will hospitalizations. Patients with even one chronic condition require more frequent visits to expensive hospitals and emergency rooms than do healthy Americans. More than 90 percent of patients in U.S. hospitals have at least one chronic disease.
Sixty percent of adults have at least one chronic disease, such as heart disease, cancer or diabetes. Forty percent live with multiple such diseases. And 90 cents of every dollar spent on health care goes toward treating someone with a chronic condition.
Those numbers are going up. By 2030, 80 percent of the population will be battling at least one chronic disease. The number of Americans with three or more will nearly triple by then.
Nearly one in five emergency room visits by chronic disease patients in 2017 were “potentially preventable,” according to one study. These avoidable trips cost $8.3 billion and accounted for 60 percent of all emergency visits at the 750 hospitals analyzed by the study. And that doesn’t even take into account the billions we’d save by preventing Americans from developing a chronic disease in the first place.
The most effective way to slow the growth of chronic disease and health insurance spending is to help patients better manage, or even prevent, chronic conditions.
Prioritizing preventative care is crucial. Less than 10 percent of adults receive preventative services like regular blood pressure and cholesterol screenings or obesity counseling. Nearly half of millennials — most of whom still have time to develop and maintain the healthy habits that can help them avert chronic disease — don’t have a primary care physician.
Sadly, many patients avoid seeking preventive care — such as regular doctor visits and taking medicines as prescribed — because they can’t afford the out-of-pocket costs required. Four in 10 Americans reported skipping doctors’ visits due to cost in 2017.
The growing popularity of high-deductible plans has also exacerbated the problem. These plans require individuals to cover thousands of dollars in health costs up front before insurance kicks in. They can be extremely expensive for patients with chronic disease, who visit upwards of 13 health care providers and fill 50 prescriptions each year.
High-deductible plans aren’t the only problem.
Separately, Americans also struggle to afford their prescriptions at the pharmacy counter. That’s because of opaque backroom deals by middlemen in the prescription-drug supply chain that benefit from keeping out-of-pocket costs high for patients.
This lack of transparency is particularly troubling for patients with chronic disease. These folks regularly require more medicines than do healthy Americans to manage their conditions.
Multiple trips to the pharmacy counter add up. Nearly one in four Americans struggles to afford their prescriptions. And those with three or more chronic conditions face out-of-pocket prescription costs that are 10 times higher than patients without any such conditions.
Failure to take medicines as prescribed can have severe health consequences. One in 10 hospital patients wind up in the hospital because they deviate from their prescription regimen. Those visits set our health care system back $289 billion annually.
Interestingly, overall spending on prescription drugs is a modest portion of total private health insurance spending; it accounted for just 4 percent of total growth between 2016 and 2018. For comparison, insurer profits and administrative fees — which were the second-highest spending category — accounted for 21 percent of total growth during that same time period.
Fortunately, there are several ways to make preventive care and prescription drugs more affordable.
For starters, policymakers could spread cost-sharing requirements more evenly throughout the year and ease tax law restrictions on employers’ ability to provide employees with assistance. Patients would have an easier time paying for their medications or routine visits to the doctor if they didn’t have to cover thousands of dollars in deductibles up front.
Reforming the way we pay for prescription drugs would also help. Right now, drug manufacturers remit billions of dollars in rebates to insurers and other middlemen throughout the drug supply chain each year. But patients don’t see any proceeds from those rebates when they refill a prescription. Requiring that a greater portion of rebates benefit patients at the point of sale could save people with type 2 diabetes, for example, $3.7 billion annually.
Lawmakers could also explore capping annual out-of-pocket drug costs for America’s sickest patients. Limiting cost-sharing would no doubt give patients financial relief, boost medication adherence and improve health outcomes.
To get a hold on our nation’s health spending, we’ll have to get a hold on chronic disease. To do so, we’ll need to make it easier and more affordable for patients to manage, or even prevent, such diseases.
• Kenneth E. Thorpe is a professor of health policy at Emory University and chairman of the Partnership to Fight Chronic Disease.