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Life Health > Health Insurance > Life Insurance Strategies

Employer health care spending tops 4.3% CAGR

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Between 2006 and 2011, employer healthcare spending experienced a compounded annual growth rate of 4.3, rising from $3,739 to $4,625 per member per year, according to new research.

These are among the highlights from a Truven Health Analytics report designed to highlight the importance of particular diseases based on their contribution to the growth in employer healthcare spending over a five-year period. Truven Health estimated national spending by employers in 2006 and 2011 for all health care services and for prescription drugs using claims data from MarketScan Research Databases the company developed.

Among all health care services, the report shows, hospital outpatient services grew the fastest, achieving in 2011 a 6.5 percent compounded annual growth rate (CAGR) or $1,344 per member per year (PMPY). All health care services in 2011 grew at the following rates:

Health care category



Hospital outpatient



Other setting












The report added that the top 20 MEGs — Truven Health “Medical Episode Groupers” that group claims into episodes of care — account for 41 percent of growth in employer health spending from 2006 to 2011.

“The leading MEG is Preventive Health Services, which alone accounted for 9 percent of spending growth,” the report disclosed. “The second-leading contributor to growth was Osteoarthritis, Except Spine — one of six musculoskeletal conditions in the top 20.”

“The third was Multiple Sclerosis, which more than doubled in PMPY spending,” the report added. “That rate was exceeded by Crohn’s Disease, another autoimmune disorder.”

Spending PMPY by major diagnostic category, the report noted, include musculoskeletal (CAGR: 5.6 percent), cancer (4.5 percent), cardiovascular (0.6 percent), gastrointestinal (3.8 percent) and women’s health/reproduction (5.3 percent).

“These results highlight how difficult it will be to manage health care costs while still providing the level of care that U.S. consumers expect,” the report concluded. “[T]he ongoing obesity epidemic is the underlying driver of many of the diseases noted in this report, a problem that will not be solved by improved healthcare delivery alone.”


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