iLoveBenefits: Industry News Blog

National Health Spending Increased 4.3% in 2016

December 12, 2017

The CMS Office of the Actuary recently released national health expenditures for 2016. Here are some key findings from the report:

• In 2016, overall national health spending increased 4.3%.
• Retail prescription drug spending increasing 1.3% to $328.6 billion in 2016.
• Private health insurance spending increased 5.1% to $1.1 trillion in 2016.
• Medicare spending grew 3.6% to $672.1 billion in 2016.
• Spending growth for Medicaid slowed in 2016, increasing 3.9% to $565.5 billion.
• Out-of-pocket spending grew 3.9% to $352.5 billion in 2016.

Source: CMS Office of the Actuary, December 6, 2017

How much do people pay out of pocket for their medical expenses?

Nearly 7.2 percent of the population (22.5 million) paid $2,000 or more in out-of-pocket medical expenses in 2012, compared with 6.9 percent (21.5 million) in 2011. In both 2011 and 2012, nearly 1.5 percent (4.8 million) of Americans paid $5,000 or more, and 0.4 percent (1.3 million) paid at least $10,000. (Source: Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey Statistical Brief #450, Differentials in the Concentration in Out-of-Pocket Health Expenditures across Population Subgroups in the U.S., 2012, and Statistical Brief #423, Differentials in the Concentration in the Level of Out-of-Pocket Health Expenditures across Population Subgroups in the U.S., 2011.)

March 10, 2015 | Categories: Benefits,Cost,healthcare | Tags: , , , | Comments (0)

U.S. Out of Pocket Expense for Prescription Drugs

According to a recent report, 18% of the $263 billion spent on retail prescription drugs in the United States in 2012 was paid out of pocket. Source: “Strategies Used by Adults to Reduce Their Prescription Drug Costs: United States, 2013,” Centers for Disease Control and Prevention, NCHS Data Brief Number 184, January 2015,

As high and higher deductible plans take hold, the percentage paid for Rx drugs should rise.

There are premiums and then there are the costs paid at time of service

According to a recent report, 21% of adults with health insurance spent 5% or more of their income on out-of-pocket health care costs (excluding premiums) over the past year. Source: “New Commonwealth Fund Report: 21 Percent of Adults with Health Insurance Spent 5 Percent or More of Their Income on Out-of-Pocket Health Care Costs,” The Commonwealth Fund, November 13, 2014,

Why Is Health Care Price Transparency Important?

Here is a reason why it is important for consumers and patients to know what a health care expense is going to cost them out of their pocket:

49% of employees surveyed have less than $1,000 with which to pay for unexpected out-of-pocket medical expenses Source: “2014 Aflac WorkForces Report: Executive Summary,” Aflac, April 16, 2014,

Health care expenses are one of the leading causes of personal bankruptcy. Perhaps if people knew what things were going to cost ahead of time, or at least immediately following receiving a service, they might be better equipped to make rational consumer choices.

2015 HDHP limits and 401(k) catch up contributions

The IRS released Revenue Procedure 2014-30 announcing the 2015 minimum deductible and maximum out-of-pocket limits for HSA-qualified high deductible health plans (HDHPs) and the maximum contribution levels for health savings accounts (HSAs).

The IRS adjusted the 2014 figures for inflation.

Effective for calendar year 2015:

  • The minimum annual deductible for an HSA-qualified HDHP plan will be $1,300 for self-only coverage and $2,600 for family coverage;
  • The maximum annual out-of-pocket limits allowable under an HDHP will be $6,450 for self-only coverage and $12,900 for family coverage; and
  • The maximum allowable annual contribution employees may make to their HSAs will be $3,350 for an individual with self-only coverage or $6,650 for an individual with family coverage.

The limit on catch-up contributions, allowed for those with HSAs who are age 55 and older, remains at an additional $1,000 per year.

For plan years beginning on or after January 1, 2014 (or upon loss of grandfathered status, if later), the Affordable Care Act ties annual plan out-of-pocket maximums (coinsurance, deductibles, copayments, and similar charges) for all types of plans (including plans that are not HSA-qualified HDHPs) to the above out-of-pocket limits.

You may access a copy of the Revenue Procedure at:

Health care costs continue to rise

According to a recent analysis:

  • The average health care cost per employee was $10,131 in 2012; $10,471 in 2013; and is projected to rise to $11,176 in 2014
  • The portion of the total health care premium that employees were asked to contribute was $2,200 in 2012; $2,303 in 2013; and is projected at $2,499 for 2014
  • Average employee out-of-pocket costs–including copayments, coinsurance and deductibles–averaged $1,984 in 2012; $2,239 in 2013; and are expected to rise to $2,470 in 2014
  • Employees’ share of health care costs—including employee contributions and out-of-pocket costs—will have risen from $2,011 in 2004 to $4,969 in 2014

Source: “Aon Hewitt Analysis Shows Lowest U.S. Health Care Cost Increases in More Than a Decade,” Aon Hewitt Press Release, October 17, 2013,

Get a basic understanding of health insurance terms – it is elementary

Facilitating State Health Exchange Communication Through the Use of Health Literate Practices – Workshop Summary

Deductible, co-insurance, out-of-pocket limits. Even to those with a basic understanding of health insurance, terms like these can be difficult to explain and understand. Under the Affordable Care Act of 2010, many more Americans will be eligible for health insurance through state insurance exchanges by 2014. Many of these individuals are among the 90 million American adults who lack basic health literacy. The IOM held a workshop that focused on ways in which health literate communication techniques can help improve communication to potential enrollees.

Read the Report >>

Average cost paid by an employee in 2012 for health care projected to be $4,581

The 2012 Average Health Care Premium Rate Increase will be Lower Than in 2011

Costs continue to rise for both employers and employees. The average healthcare premium is now projected to be $10,475. (That considers all family types – family, 2 party and single.) The employee contribution both to premium and to the costs paid by the patient at time of service is now on average $4,581.

According to Aon Hewitt’s analysis, the 2012 average health care premium rate increase will be 7.0 percent, which is slightly lower than the 7.5 percent mark in 2011, and on par with the 6.9 percent increase in 2010. However, the average total health care premium per employee for large companies is projected to be $10,475 in 2012, up from $9,792 in 2011, and $9,111 in 2010. The amount employees will be asked to contribute toward this premium cost in 2012 is $2,306, compared to $2,084 in 2011, and $1,952 in 2010 (or 21.4 percent of the total health care premium). Meanwhile, average employee out-of-pocket costs, such as copayments, coinsurance and deductibles, are expected to be $2,275 in 2012, compared to $2,007 in 2011, and $1,691 in 2010.

Source: Aon Corporation, October 3, 2011

2009 US Health Care Spending $2.5 Trillion

In 2009, health care spending in the United States grew 4.0% to $2.5 trillion, or $8,086 per person, the slowest rate of growth in the
50-year history of the National Health Expenditure Accounts (NHEA).

  • Private health insurance spending increased only 1.3% in 2009, down from 3.5% in 2008, primarily due to a 3.2% drop in enrollment
  • Hospital spending increased 5.1% to $759.1 billion in 2009 compared to 5.2% growth in 2008
  • Physician and clinical services spending increased 4.0% in 2009 to $505.9 billion, down from 5.2% growth in 2008
  • Retail prescription drug spending grew 5.3% in 2009 to $249.9 billion, up from 3.1% growth in 2008
  • Spending for home health care services provided by freestanding facilities grew 10.0% to $68.3 billion, up from 7.5% growth in 2008
  • Out-of-pocket spending rose only 0.4% in 2009 compared to 3.1% growth in 2008

6, 2010,

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