1% of Private Health Insurance Spending Growth Tied to Home Health Care

Private health insurance spending grew by $101.3 billion between 2016 and 2018.

Virtually none of that growth was tied to home health care services, however.

The insights into private health insurance spending over the past few years come from a recent economic analysis put together by the Partnership to Fight Chronic Disease (PFCD), a Washington, D.C.-based nonprofit organization that works to raise awareness of chronic diseases. Aetna Inc., LeadingAge and the American Hospital Association are just three of PFCD’s more than 80 partners.

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Of the more than $101 billion in private health insurance spending growth between 2016 and 2018, more than $42.7 billion — or about 42% of the total increase — was linked to hospital services.

Despite widespread efforts to shift care upstream, home health care private health insurance spending increased by just $79 million — or about 1% of the total increase — during that same period.

Source: Partnership to Fight Chronic Disease (2019)

From 2016 to 2030, chronic disease is projected to cost the U.S. health care system about $42 trillion.

About six in 10 U.S. adults currently have at least one chronic condition, with more than four in 10 living with two or more.

“The highest of these insurance spending costs glaringly point at [hospital] utilization, and with an increasing population of Americans living with one or more chronic conditions, the demand for health services will inevitably persist,” PFCD Chairman Dr. Kenneth E. Thorpe said in a press release. “Achieving better overall health is essential to lowering health care costs, and the most impactful place to start is by elevating how we address chronic disease on the health care agenda.”

In addition to his role at PFCD, Thorpe also chairs the Rollins School of Public Health’s Department of Health Policy & Management at Emory University.

Broadly, health spending growth is determined by both how much a health insurer is spending on medical care services and the health plan’s administrative spending.

To some extent, it shouldn’t be overly surprising that private insurers aren’t spending a ton on home health care compared to other areas. Home health providers have long maintained that they’re underpaid and undervalued when working outside of the Medicare fee-for-service landscape. 

But that’s slowly changing, industry insiders say.

“I’m seeing a lot of interest from payers right now in trying to understand the post-acute care solution and the continuum of care that’s available in the home,” Christy Vitulli — senior vice president of payer relations and network innovation at Baton Rouge, Louisiana-based Amedisys Inc. (Nasdaq: AMED) — previously told Home Health Care News. “I’m also seeing a lot of interest in how that transfers over to value for payers, and it’s creating a lot of good dialogue with our managed care partners.”

Furthermore, insurers and health care policymakers alike are starting to realize how pre-acute care can be a driver for lowering overall health care spending by keeping people out of institutional settings.

In fact, that thought process was a big factor in the initial move by the Centers for Medicare & Medicaid Services (CMS) to allow Medicare Advantage (MA) plans to cover non-medical in-home services and supports in April 2018.

CMS doubled down on that move in April 2019 — and now at least 148 plans expect to cover in-home support services in 2020. 

Broadly, MA plans from private insurers must cover basic Medicare benefits while also offering a handful of extras. 

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