The third video in our HCR Droids series looks at the process used to determine health insurance rates.
You can read more about the rating process here, and you’ll find more about healthcare cost control here.
Tag Archives: unit cost
The utilization puzzle
Health cost are up 7.4%, but the increase is far more complicated than this single number.
Look first at the hospital components of this cost trend.
- The inpatient cost trend increased from 7.1% to 7.7% this year. Utilization remained flat and the increase was instead driven by unit costs.
- The outpatient cost trend increased from 9.4% to 10.2%, again largely due to an increase in unit costs.
- The physician cost trend decelerated, though physician costs remain the biggest piece of the puzzle.
- Pharmacy costs saw a deceleration in the cost trend but still increased higher than other components of care at 7.9%, with just under 40% of that due to increased utilization. The increased use of generics over previous years complicates this cost trend.
Over-utilization clearly plays a role in the overall cost of healthcare, but as these dynamics illustrate, utilization as a cost driver is a complicated entity.