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Kids' Health Care Costs Growing Faster Than General Population's

Health-care spending on children grew at a much faster pace than the overall U.S. population over a three-year span, according to a new study.
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Health-care spending on children grew at a much faster pace than the overall U.S. population over a three-year span, driven in part by an increase in hospital admissions for newborn babies, according to a new study.

The wide disparity identified in the Health Care Cost Institute report raises questions about whether that higher spending rate is actually leading to better health outcomes for kids, and to what extent insurance prices will be affected if the trend continues.

"We do know that spending is going up every year, we know that spending on kids is going up faster, and this is particularly true for babies," said Amanda Frost, a senior researcher at HCCI, a nonprofit backed by large health insurers. "We don't know what the impact of this spending is on the population's health, or families or the health-care system."

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In its report, HCCI looked at annual insurance claims for more than 10 million children covered by job-based health plans. About half of all children 18 years and younger were covered by such insurance in 2013.

From 2010 to 2013, health-care spending on kids rose by an average annual rate of 5.7 percent, HCCI found.

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During the same time frame, spending on health care for all people up to the age of 64 grew at an annual average rate of 3.9 percent.

In dollars terms, per capita spending for children increased by $391 since 2010, landing at $2,574 in 2013. That compares to the $4,864 per capita spending on health care for the general population.

Spending on boys up to the age of 18 was higher than girls—$2,716 per capita for boys compared with $2,426 for girls. But the reverse was true when HCCI looked at just teens: Health spending on teen girls was higher than on boys of that age group.

The higher-than-average spike in spending for children compared with the general population came despite the fact that both prescription drug use and visits to the emergency room dropped in 2013. Price savings also came from a dramatic shift toward the use of less expensive generic drugs.

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The overall increase in spending was fueled by higher numbers of inpatient admissions to hospitals by children and increased prices for such admissions, HCCI's report said.

"The largest dollar increase in the average price per service was in inpatient admissions," the report noted. In 2013 alone, "the average price per admit increased by $744," hitting $14,685 per admission.

And the biggest driver of the rise in such admissions were newborn babies, between 0 and 18 days old, who were admitted separately from their mothers.

"We are seeing higher average prices for baby boy admissions than for baby girl admissions," Frost said. "We're not really sure why, yet ... the claims data is not very good at telling us why that is true."

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Babies overall — newborns to 3-year-olds — had the highest level of spending by far of any age group for juveniles, $4,813 per capita. In a distant second place was spending on teenagers age 14 to 18 years old, at $2,746 per capita, HCCI's report found. Babies also had the fastest average annual growth of health spending of any other group of kids, at 6 percent.

Per capita spending on babies was even higher than one group of adults, those between the ages of 26 and 44, whose per capita spending was $4,258 a year.