Insured Patients Paying Substantial Out-of-Pocket Costs for Inpatient Care

Cost sharing for hospitalizations among nonelderly adults increased 37% between 2009 and 2013, more than the rate of medical inflation, according to a review of national hospital claims from 3 major commercial insurance plans. In addition, the study found that even among insured individuals out-of-pocket spending is substantial.

Emily R. Adrion, PhD, MSc, of the University of Michigan Medical School, and colleagues studied claims for over 7.3 million hospitalizations from approximately 50 million privately insured individuals and published their findings in the October 2016 issue of JAMA Internal Medicine.

“Our findings indicate a trend toward fewer plans requiring copayments at the point of service and more plans requiring higher coinsurance and deductibles after care is delivered,” the researchers concluded.

In recent years, health insurance policies have changed so that patients are increasingly responsible for a growing share of their healthcare expenditures through out-of-pocket spending. Proponents of this trend argue that it has the potential to reduce overuse and inappropriate use of healthcare. But increased out-of-pocket spending can also block access to appropriate care and affect treatment choices, and high levels of cost sharing may affect quality of life, especially for low-income patients, the study authors noted.

The investigators also analyzed out-of-pocket spending associated with 7 inpatient diagnoses and procedures that were among the more commonly occurring primary inpatient diagnoses and procedures during the study period: acute myocardial infarction (MI), live birth, pneumonia, appendicitis, coronary artery bypass graft (CABG), total knee arthroplasty, and spinal fusion. The authors found out-of-pocket spending related to hospitalization for acute MI and acute appendicitis rose significantly and exceeded $1500 in 2013. Cost sharing associated with procedures was lower in general, especially for CABG.

Total cost sharing per inpatient hospitalization increased by 37% from $738 in 2009 to $1013 in 2013. Growth in total cost sharing was lower in individual market and consumer-directed health plans, although both had higher overall levels of cost sharing. In 2013 total cost sharing per inpatient hospitalization was highest among patients enrolled in individual health insurance plans, with adjusted total cost sharing of $1875, and consumer-directed health plans, with adjusted total cost sharing of $1219.

The growth in cost sharing was driven by increases in total payments per hospitalization, which grew at an annual rate of 3.3%, as well as by increases in the percentage of total hospital payments paid out-of-pocket by the patient, which rose from a mean of 11.2% in 2009 to 12.7% in 2013 after inflation and case-mix adjustments.

Between 2009 and 2013 total cost sharing per inpatient hospitalization increased in every state, with the largest increases in Georgia (67%), Louisiana (50%), and Colorado (50%); the smallest increase occurred in Rhode Island (3%) and Montana (12%). The researchers said the increases represents an annual growth rate of 6.5% compared with the 5.1% growth in health insurance premiums reported during this same period.

“This 6.5% annual growth in cost sharing for hospitalizations coincided with a notable slowing in the growth of overall healthcare spending, which rose at a rate of just 2.9% from 2009 to 2013,” the authors wrote. They concluded that the growth in cost sharing was driven primarily by increases in the amount applied to patients’ deductibles, which rose by 86%, and by increases in coinsurance, which grew by 33% during the study period, rather than by copayments.

Noting that an estimated 85% of all commercial health insurance benefit packages require coinsurance for inpatient hospitalizations in addition to meeting an annual deductible, the authors suggest that cost sharing for inpatient hospitalizations remain an important and overlooked area for policy reform.