National spending growth on doctor services rises

Medical breakthroughs and demand generated by an aging population are two reasons for the increase.

By David Glendinning, AMNews staff. Jan. 30, 2006.

Washington -- The growth in the nation's total spending on health care slowed in 2004, but expenditures on physician services swung upward.

Patients, along with both public and private payers, spent just about $400 billion on doctor care in 2004, according to a recent report by the Centers for Medicare & Medicaid Services Office of the Actuary published in the journal Health Affairs. This 9% increase over the 2003 figure is the largest boost in such spending in about 15 years.

Spending on more services offered by physicians, as well as the increasing complexity of services, is playing a large role in driving annual national health expenditures up toward the $2 trillion mark, the authors said. Physician services accounted for nearly a quarter of the $137 billion increase in total spending on health care in 2004, while hospital spending made up 33%.

The trend is significant for the people who pay the doctors' bills, said Cynthia Smith, a CMS economist and lead author of the report.

"The trajectory of health care spending continues to be driven by new medical treatments, rising prices and growing utilization," she said. "Medical progress has improved health care for many families, but rising costs are also a growing burden for households, businesses and governments."

The medical reasons for these trends come as no surprise to physicians, said AMA President J. Edward Hill, MD. "Medical advances, such as research breakthroughs, innovations in technology and a focus on preventive care, are improving the health of America's patients, but they are also increasing the need for medical services. Conditions that once required hospitalization now are routinely treated in physicians' offices at a lower cost to insurers and patients."