U.S. Health Care Spending Increased 10% in 2001, HSC Study Says
Health care spending in the United States increased 10% during 2001, the largest jump in more than 10 years, according to a study published today on the Web site of the journal Health Affairs, the Contra Costa Times reports. The study, conducted by the Center for Studying Health System Change, analyzed financial data from hospitals, pharmacies and physicians and determined that an increase in hospital spending -- in large part caused by greater use of hospital services and rising prices -- contributed most to the increase in total health care spending (Silber, Contra Costa Times, 9/25). For the first time since 1995, prescription drug costs were not the biggest contributor to the overall rise. Hospital spending rose 12% on average last year and made up 51% of the overall spending increase, the study found. Spending on outpatient hospital services increased 16.3% and was the single largest factor in the rise in overall spending, accounting for 37% of the increase (Agovino, AP/Las Vegas Sun, 9/24). "People are getting more tests and treatments as managed care plans abandon tight restrictions on care, but higher hospital prices are playing a role as well in rising costs," HSC President Paul Ginsberg said (Rabin, Long Island Newsday, 9/25). Other factors in the overall spending increase included costs for physician services, which accounted for 28% of the increase, and costs for prescription drugs, responsible for 21% of the increase (MacDonald, Hartford Courant, 9/25). In addition, a second HSC study found that, "[c]ontrary to popular belief," the aging of the baby boom generation did not play a major role in the health care cost increase for people under age 65 (HSC release, 9/25).
HSC found that spending on outpatient hospital services increased in large part because insurers are encouraging their members to use outpatient facilities rather than more expensive inpatient services. In addition, patients are "drawn" to outpatient facilities by advertising campaigns, convenience and "the availability of many types of surgical procedures," USA Today reports (Appleby, USA Today, 9/25). The AP/Sun notes that, compared to prescription drug costs, there "hasn't been as much attention paid to keeping outpatient costs down" because "hospitals haven't felt pricing pressure by insurance companies" (AP/Las Vegas Sun, 9/24). The study also attributed the rise in hospital spending to hospitals' increased ability to "drive hard bargains with insurers over rates because they've merged or were otherwise able to capture large market share," according to USA Today (Appleby, USA Today, 9/25). The overall increase in health care spending led to a 12.7% rise in health insurance premiums last year, the study determined (Long Island Newsday, 9/25). But researchers noted that the increase in health care spending is beginning to slow. From January to June, spending rose only 8.8% (AP/Las Vegas Sun, 9/24). "Developments are afoot that make it unlikely that cost trends will accelerate further," the study states, noting that as insurers force members to pay for a greater share of health care costs, the demand for services declines (Hartford Courant, 9/25). The study is available online at http://www.hschange.com/CONTENT/472/.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.