Health Care Cost Growth Among the Privately Insured

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Controlling health care cost growth remains a high priority for policymakers and private decisionmakers, yet little is known about sources of this growth. We examined spending growth among the privately insured between 2001 and 2006, separating the contributions of price changes from those driven by consumption. Most spending growth was driven by outpatient services and pharmaceuticals, with growth in quantities explaining the entire growth in outpatient spending and about three-quarters of growth in spending on prescription drugs. Rising prices played a greater role in growth in spending for brand-name than for generic drugs. These findings can inform efforts to control private-sector spending.

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