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Recent Analysis Shows that Just 1% of Private Health Insurance Growth Went to Home Health Care

Chris Murray
Posted on: December 13, 2019 by Chris Murray

The home health care industry is booming across the United States. As our nation’s population ages, many seniors prefer the comforts of home settings, choosing to receive care in their homes rather than seeking residence at more traditional long-term care facilities. As a result, the industry has seen significant growth over the past decade. Unfortunately, private health insurance spending has lagged behind, with little growth tied to home health care models. As with insurance for home health care providers, it is imperative that healthcare managers understand the dynamics behind this flat growth. 

Poor Growth in Private Health Insurance for Home Health Care

According to an economic analysis created by the non-profit Partnership to Fight Chronic Disease (PFCD), private health insurance spending grew by over $100 billion in a two-year period between 2016 and 2018. Of that spending growth, nearly $43 billion when to hospital services. At the same time, spending on home health care services increased by just under $80 million, or about 1% of the total growth increase. This figure is substantially less than other insurance spending increases, including clinical services, prescription drugs, and nursing homes. 

The economic analysis takes into account several factors, including how much health insurers are spending on medical care and what amount is being spent on other costs such as administrative management of insurance plans. 

Analysts with the PFCD suggest that the increases in insurance spending on hospital services are due to the rise of chronic diseases in the U.S. population. Such chronic diseases are expected to cost the U.S. health care system in excess of $42 trillion in the next 20 years. Home health care providers have indicated a pervasive perception that their services are undervalued by the healthcare industry, especially when operating outside fee-for-service models imposed by Medicare. As such, spending is growing far more slowly than was expected. 

Growth on the Horizon

The poor growth of insurance spending on home health care services may be bleak, but industry analysts believe that this healthcare sector will see improved growth in the coming years. The industry is beginning to understand the value of pre- and post-acute care solutions, including home health care services. In particular, pre-acute care, or the services rendered in the home by caregivers, can help combat chronic diseases outside of a hospital environment. This, in turn, will eventually drive growth in insurance spending for the home health care sector while reducing excessive spending on hospital and specialty clinic services.

Regulatory oversight is changing as well. The Centers for Medicare and Medicaid (CMS) began to allow certain plans to cover non-medical services by home health care providers in 2018, and expanded this coverage again in 2019. Insurance for home health care providers continues to serve as a foundational risk management strategy for this sector of the healthcare environment. Private insurance spending growth will serve to further stabilize this important part of the health landscape.  

About Caitlin Morgan

Caitlin Morgan specializes in insuring assisted living facilities and nursing homes and can assist you in providing insurance and risk management services for this niche market. Give us a call to learn more about our programs at 877.226.1027.

Posted in: blog Home Health Care