Rising Care Costs Increased Health Spending As Americans Used Fewer Services

As Americans used less medical services overall, health care spending rose at double the rate of inflation in 2010 because hospitals, outpatient centers, and other providers charged higher prices, according to a report by the Health Care Cost Institute.

Health costs jumped by 3.3 percent during the economic downturn even though people were using less care, so people with job-based insurance “are paying more and getting less,” said Chapin White, a senior researcher at the Center for Studying Health System Change. Hospitals and other medical providers “just seem to be able to raise prices faster than general inflation,” he said.

Health care costs grew the fastest for children under 18, and the prices for outpatient visits and inpatient admissions increased faster than other health services:

The analysis studied 3 billion claims paid by insurance companies Aetna, Humana, and UnitedHealthcare for 33 million people who have job-based insurance nationwide, but it does not include spending for people on Medicare, Medicaid, or who buy their own policies.

Along with the growing costs, average health care costs for a family of four have topped $20,000. The report by the Commonwealth Fund found that people in the U.S. spend more on health care per person than any other developed nation, but do not receive the best quality of care.

Insurers argue they simply pass on the rising cost of care to consumers, but because of the rapid increases, these two reports about rising health care costs highlight why the U.S. needs the Affordable Care Act. President Obama’s health care reform law will help reduce costs and improve quality, which is key to making health insurance more affordable.