As premiums rise, are even the insured scrimping by skipping doctor visits?

U.S. Bureau of Labor Statistics numbers show more money spent on health insurance but less on care.

By — Posted Oct. 10, 2011

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Americans are spending more money on insurance premiums, and they're spending less out of pocket on health services. The trend doesn't reflect patients getting more health coverage for their insurance money, experts say. It reflects patients, even those with insurance, avoiding spending cash on health care they think can be put off.

"Patients are paying more, and they are getting less. It's a distortion of the economics of health care in our country," said Glen Stream, MD, president of the American Academy of Family Physicians. "And we see people for economic reasons deferring important screening procedures or coming in less often for chronic conditions such as diabetes."

The U.S. Bureau of Labor Statistics' annual report on consumer expenditures, released Sept. 27, found that the amount paid out of pocket for health insurance increased 2.6% in 2010. But medical services, a category that includes physician visits, went down 1.9%. On average, Americans spent $3,157 overall out of pocket, including $1,831 on insurance and $722 on medical services.

The gap between health insurance inflation and medical services costs was even greater in 2009 -- an 8% gain to a 1.2% rise. But at the beginning of 2010, many experts believed that consumers would spend more on care not paid by insurance as the economy recovered from recession. As it turned out, even though the economy grew slightly, that didn't happen, experts said.

Growing consumer responsibility

The BLS report, which reported an overall consumer spending decline of 2% in 2010, did not explain any spending trends. However, experts cite various trends and research to boost their contention that patients, insured or not, are struggling to pay for health care -- and that the trend is not changing.

  • The number of uninsured grew by nearly 1 million in 2010, to 49.9 million, with 1.5 million losing employer-based coverage, according to the U.S. Census. The BLS said the health insurance spending rate was held down somewhat because of more people with no insurance being factored into the growth rate.
  • Those who had employer-based insurance were paying more of their money for coverage and care. An Aon Hewitt survey released Oct. 3 said employees, on average, contributed $1,952 toward premiums in 2010 and $2,084 in 2011, and will have to contribute $2,306 in 2012 (an increase from 21.4% of the total premium to 22%). Other surveys have numbers that are higher or lower, but they show similar growth.
  • The insured are taking on larger deductibles, and thus more responsibility for health costs. A survey by America's Health Insurance Plans found that the number of people with high-deductible health plans paired with a health savings account went from 10 million in January 2010 to 11.4 million in January 2011. HSA holders are responsible for a greater amount of their initial health costs than other insured people. As a result, according to a RAND Corp. study released March 24, they spend 14% less on average out of pocket on health than holders of other plans. According to the Commonwealth Fund, 18% of those insured all year in 2010 had a deductible of more than $1,000, a minimum for most HSAs.
  • Consumers' insurance and deductible costs are far outstripping wages. Insurance costs have doubled since 2001 while wages have gone up only 34%, according to a Kaiser Family Foundation study released Sept. 25. The Census Bureau reported that wages are on the decline, with the median household income down $1,100 to $49,445 in 2010.
  • There is evidence that consumers are cutting back on care. A Consumer Reports study released Sept. 27 found that 48% of prescription drug users said they put off doctors' visits or medical procedures, declined tests or ordered less expensive drugs from outside the United States because of costs. That was up 9 points from 2010. An Aug. 25 Center for Studying Health System Change tracking report found that the percentage of Americans skipping or delaying needed care actually fell to 17% in 2010 from 20% in 2007, but that 65.9% of the insured in 2010 cited cost as a barrier to care, up from 60.7% in 2007.
  • Health insurers are revising downward their health spending projections after most reported, in 2010 and early 2011, less-than-expected spending on care.

All these factors, analysts said, have combined to push more costs to consumers at a time when their income is unstable. As a result, consumers are cutting back where they can on health spending -- perhaps carrying health insurance but not accessing care unless it's an emergency.

"Employers are shifting costs to employees so they pay higher deductibles and co-pays, and at the same time you have this uncertainty," said Cyril Chang, PhD, director of the Methodist Le Bonheur Center for Healthcare Economics at the University of Memphis in Tennessee. "This is causing people to hesitate. Patients are thinking twice."

The insurance industry said that despite the drop in out-of-pocket spending on care, the cost of medical services is driving higher premiums.

"These [BLS] statistics are not looking at how much prices are going up for services," said Robert Zirkelbach, spokesman for America's Health Insurance Plans. "The biggest driver of health care costs are the prices being charged for physician services, hospital care and prescription drugs."

Not all affected equally

The BLS data, which broke down spending by age group and income bracket, said some populations were more affected by the need to spend more on health than others.

In 2010, spending for people 25 or younger reversed years of decline in insurance and care -- in part, experts said, because the Patient Protection and Affordable Care Act allowed those younger than 26 to be on their parents' policies.

Patients 55 to 64 years old also spent more on insurance and care. "This is a group that is seeing an increase in their need for health care, and they're going to try whatever it takes to have health insurance and are willing to pay more for it," said Stuart Altman, PhD, professor of national health policy at Brandeis University in Massachusetts.

People in the lowest 20% of income cut both insurance spending and care, while those in the second-highest 20% paid more for insurance but sliced out-of-pocket spending on care. The only income bracket to spend more on both was the top 20%.

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External links

Consumer Expenditure Survey, U.S. Bureau of Labor Statistics (link)

Employer Health Benefits 2011 Annual Survey, Kaiser Family Foundation and the Health Research & Educational Trust (link)

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