Drugs Costs May Not be Contributing to Premium Increases

A recent analysis conducted by Avalere Health found that health insurance premium increases for 2017 are largely driven by outpatient spending.

Researchers found that spending on outpatient services accounted for 29.9% of premium increases, and comprised 27.4% of all spending in the plans for 2015. Interestingly, prescription drugs are only responsible for a premium increase of 14.3%, despite claims that these increases are due to spending on costly specialty drugs.

Prescription drugs only accounted for 17.7% of spending in 2015, according to the analysis.

“Preliminary data indicate that drugs are not likely to have a disproportionate impact on premiums in 2017,” said Caroline Pearson, senior vice president at Avalere. “Instead, outpatient spending continues to drive premium increases.”

Researchers also found that spending on inpatient services seem to be decreasing. These costs are only estimated to contribute 15.4% of increases in 2017, down from 19.6% in 2015.

“The data underscore the need to look across services and settings of care when considering premium drivers,” said Elizabeth Carpenter, senior vice president at Avalere. “In addition, experiences vary dramatically by state, underscoring the local nature of healthcare markets.”