Related BLS programs | Related articles
November 1992, Vol. 115, No. 11
Outpatient surgery: helping to contain health care costs
Robert B. Grant
The price of health care increased 109 percent between 1981 and 1991 - more than twice the 50-percent rise in the price of all items in the Bureau of Labor Statistics Consumer Price Index1 - prompting employers to encourage workers to use less expensive health care services. Health insurers have introduced measures to control costs, offering incentives for seeking a second opinion for surgical procedures and requiring approval by an insurer before hospital admissions. These measures allow health care carriers to evaluate an illness or injury of an enrollee before the prospective patient enters the hospital or undergoes surgery. Carriers can then determine in advance which expenses they will cover.
The cost of hospital care has risen 135 percent in the past decade2; this rise affected health care prices significantly because hospital expenses make up approximately 40 percent of all health costs.3 Health insurance carriers have responded by encouraging participants to shift their health care use from inpatient hospital services to less expensive outpatient services. For example, carriers often offer financial incentives for choosing out-patient, rather than inpatient, surgery.
Approximately 80 percent of full-time employees participated in an employer-provided health care plan during the 1989-90 period; all participants were covered for inpatient and outpatient surgery. Inpatient surgery costs generally were covered on a percentage of usual, customary, and reasonable charges,4 and subject to an annual deductible and a lifetime maximum benefit. Health care plans covered costs of outpatient surgery at the same rate as inpatient surgery or at a higher percentage in an effort to encourage the use of outpatient services.
This article examines benefits provided by health care plans for inpatient and outpatient surgery, and discusses the plans' incentives for encouraging outpatient surgery. It also explores some reasons for and against choosing outpatient, rather than inpatient, surgery.
Data are from the 1989 and 1990 BLS Employee Benefits Survey, which provides representative data for 77.9 million full-time employees.5 The survey includes data on many types of employer-provided benefits, including health care, life insurance, retirement and capital accumulation plans, and paid leave.
This excerpt is from an article published in the November 1992 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
Read abstract Download full text in PDF (256K)
1 Information on the price change is from the Bureau of Labor Statistics Consumer Price Index for all Urban Consumers (CPI-U). For more information, see CPI Detailed Report, December 1991.
2 CPI Detailed Report
3 Current Trends in Health Care Costs and Utilization (Mutual of Omaha, 1991), p. 26.
4 Usual, customary, and reasonable charges are defined as being not more than the physician's usual charge; within the customary range of fees charged in the locality; and reasonable, based on the medical circumstances.
5 Employee Benefits in Medium and Large Firms, 1989, Bulletin 2363 (Bureau of Labor Statistics, June 1990) provides representative data for 32.4 million full-time employees in private establishments with 100 employees or more. Employee Benefits in Small, Private Establishments, 1990, Bulletin 2388 (Bureau of Labor Statistics, September 1991) provides representative data for 32.5 million full-time employees in private establishments with fewer than 100 employees. Employee Benefits in State and Local Governments, 1990, Bulletin 2398 (Bureau of Labor Statistics, February 1992) provides representative data for 12.9 million full-time employees in State and local governments.
Within Monthly Labor Review Online:
Welcome | Current Issue | Index | Subscribe | Archives
Exit Monthly Labor Review Online:
BLS Home | Publications & Research Papers