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Life Health > Health Insurance

Private health insurers face ACA money squeeze

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New federal government health spending figures show how the Affordable Care Act and other cost control efforts are slowing private health insurers’ administrative spending.

Total national health expenditures, or NHE, increased 5.8 percent in 2015, to $3.2 trillion, according to new data from actuaries at the Centers for Medicare & Medicaid Services (CMS).

Related: Some projected net health insurance costs go poof

That health spending increase rate was up from 5.3 percent in 2014.

The U.S. gross domestic product, or total national income, rose just 3.7 percent in 2015. Because health spending grew faster than GDP, health spending ate up 17.8 percent of GDP in 2015, up from 17.4 percent in 2014, and up from 17.2 percent in 2013.

Some of the increase in health spending was because of growth in the U.S. population, but the amount of health spending per person also increased faster than GDP. Per-person health spending increased 5 percent in 2015, to $9,990 per person.

The Medicare actuaries summarized the information in a report published behind a log-in wall by Health Affairs, an academic journal that focuses on health care finance and delivery efforts. The actuaries have published the data used in the report on the CMS website.

Here’s a look at some of the details, drawn from the Health Affairs report and the underlying data:

Net cost of insurance

The government tracks two types of insurance spending: overall payer spending and “net cost of insurance” expenditures.

The overall spending figures include the cost of paying the patients’ medical bills.

The net-cost-of-insurance figures include just what an insurer or some other entity, such as Medicare, spends on its offices, employees, agent commissions, compliance lawyers, websites and other sales, general and administrative costs.

An analysis of the underlying data shows that private health insurers’ net-cost-of-insurance spending increased just 2 percent in 2015, to $127 billion, or about 4 percent of total U.S. health spending.

An increase in the net-cost-of-insurance expenditures at Medicare, Medicaid and other government health programs drove up the total rate of increase in the net cost of health insurance to 7.6 percent.

Because claim costs increased much faster than what health insurers spent in-house, on their own operations, total private health insurance spending increased 7.2 percent in 2015, to $1.1 trillion, or 33 percent of health spending, and 5.9 percent of GDP.

Patients’ out-of-pocket costs

Insurers and policymakers have talked about trying to curb health spending by increasing patients’ own out-of-pocket costs, and some have said that the ACA benefits design rules might have changed coverage in ways that have increased many consumers’ out-of-pocket cost obligations to levels the consumers can’t handle.

The new government report shows out-of-pocket spending increased 6 percent in 2015, to $338 million, or about 10 percent of total health spending. The rate of increase in patients’ out-of-pocket spending was up from 5.6 percent in 2014, and up from 3.1 percent in 2013.

Basic research

In recent years, one concern about national health spending is that spending on noncommercial health research fell every year from 2012 through 2014.

In 2015, noncommercial health research spending increased 1.8 percent, to $47 billion.

Although health research spending increased in 2015, the rate of increase was smaller than it was for any other major category of health spending.

Long-term care

For sellers of long-term care planning services, one highlight in the government’s health spending data files is information about private insurers spending on nursing home care and other long-term care facilities.

Private insurers, including health insurers, accounted for just $13 billion of the $157 billion in 2015 spending on long-term care facility care, but the amount they spent increased 9.4 percent, while overall long-term care facility spending grew just 2.7 percent.

The patients’ own long-term care facility spending rose just 1 percent. Medicaid spending in that area rose 1.1 percent.


CMS: Medical research spending may be rising

CMS: Health spending share of GDP stabilizes

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