Health Care Spending for U.S. Residents With Private Health Insurance Rose by 8.2% in 2004, Study Finds
Health care spending for U.S. residents with private health insurance increased by 8.2% in 2004, about the same as the growth in 2003 and almost four times the growth in wages, according to a study published Tuesday on the Web site of the journal Health Affairs, the Washington Post reports (Connolly, Washington Post, 6/21).
For the study, researchers from the Center for Studying Health System Change analyzed data from the Milliman Health Cost Index, the Bureau of Labor Statistics, the Towers Perrin 2005 Health Care Cost Survey and the National Business Group on Health/Watson Wyatt Worldwide 2005 Employer Survey of Trends in the Health Care Marketplace (Munshi, AP/Detroit Free Press, 6/21). The study excluded data on Medicare spending but included data on Medicaid spending (Won Tesoriero, Wall Street Journal, 6/21).
Health care spending growth in 2004 exceeded the rate of inflation by 2.6 percentage points, according to the study. The study indicates that the recent decreases in health care spending growth might not continue in the future and that growth likely will remain the same over the next few years. In 2001, health care spending increased by 11.3%, compared with 10.7% in 2002 and 8.4% in 200 (Higgins, Washington Times, 6/21).
The study found that spending growth in 2004 for four areas -- inpatient and outpatient hospital services, physician visits and other services such as home health care and ambulatory services -- remained about the same (AP/Detroit Free Press, 6/21). In addition, the study found that spending growth for prescription drugs in 2004 decreased for the fifth consecutive year from 8.9% in 2003 to 7.2%, which researchers attributed to a decrease in the growth of medication prices (Rapaport, Sacramento Bee, 6/21).
In 2004, prescription drug prices increased by 3.3%, compared with 5.2% in 2002 and 2003, according to the study (USA Today, 6/21). Researchers also said that increased use of generic drugs contributed to the decrease in prescription drug spending growth (Washington Times, 6/21).
Employer health insurance premium rate growth decreased in 2004, with average increases of 8% to 10% expected in 2005, the study found (AP/Detroit Free Press, 6/21). The trend has resulted in part because employers have passed costs to workers through increased health insurance deductibles and copayments for prescription drugs, but "in 2005 such cost shifts are well below what they were" between 2002 and 2004, USA Today reports (USA Today, 6/21).
According to the Journal, for employers, "the leveling off of health cost increases at a high rate suggests the health insurance premiums they pay also will halt a recent decline and remain high," and they likely will shift additional costs to workers in the future (Wall Street Journal, 6/21).
HSC president and study co-author Paul Ginsburg called the results of the study "very worrisome." He added, "If the cost trend stays at the level it is today -- well above the trend of earnings -- this could lead to a substantial decline in the (percentage of) people with insurance" (Washington Post, 6/21). "The implications for affordability of health insurance are very negative," he added (USA Today, 6/21).
Ginsburg also said that construction of new hospitals and outpatient facilities might contribute to increased health care spending in 2005 (AP/Detroit Free Press, 6/21). "I don't think there's much basis for expecting health care cost trends to be low for a very long time because advancing medical technology is driving up costs," Ginsburg said (Wall Street Journal, 6/21). The study is available online.