GOVERNMENT & MEDICINE

Rising health care costs are not going away

Hospitals are driving much of the spending growth, while doctors still lack the negotiating power to demand higher payments.

By Joel B. Finkelstein, AMNews correspondent. Aug. 1, 2005.

Washington -- The outlook for future health care costs just got a little grimmer in the estimated $1.8 trillion industry. Based on 2003 data, economists had a glimmer of hope that health care spending growth had begun to relent after several years of record-level increases. But now that 2004 numbers are available, it seems that spending growth has plateaued, economists from the Center for Studying Health System Change said.

"Unfortunately, the good news of one year ago that health care cost trends turned downward has now been replaced by the bad news that trends stabilized in 2004 at a relatively high rate of growth," they write in a Health Affairs Web exclusive; the abstract is available free (content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.286v1)

The article, which tracks the rate of growth among people with private health insurance, shows spending growth fell from 10.7% in 2002 to 8.4% in 2003. But it only slid to 8.2% in 2004.

Spending on hospitals accounted for 54% of that 2004 spending growth, the report said. Prescription drugs accounted for 21% of the increase, despite making up a relatively small proportion of total spending. Money spent on physician care accounted for 24% of the overall health care spending increase, even though spending on doctors grew at a slower rate than spending on other health care entities.

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