Health Insurance Daily

Health Care Inflation Dips

New research confirms earlier evidence that medical costs are rising at slower rates. Health care spending rose 7.9% in 2004, down from 8.2% in 2003 and 9.1% in 2002, according to report by the Centers for Medicare & Medicaid Services.

“While the growth rate is declining, the cost of health care continues to be a concern for government, business, individuals and families,” Health and Human Services Secretary Mike Leavitt comments. “We must build on steps already taken — the new Medicare prescription drug benefit, advancing health information technology and encouraging a prevention-oriented society — to find innovative, market-based ways to control costs."

Spending on prescription drugs grew 8.2% in 2004, down from 10.2% in 2003 and 14.3% in 2002. To explain this trend, CMS cites increased reliance on generic drugs, more use of over-the-counter antihistamines and anti-ulcerants, greater mail-order dispensing, and reduced consumption of certain drugs due to safety concerns.

Private health insurance premiums climbed 8.4% in 2004, down from 11.5% in 2002 and 10.4% in 2003. Meanwhile, hospital spending increased 8.6% in 2004, while spending on physician services grew 9%.

Americans spent a mind-boggling $1.9 trillion, or $6,280 per person, on medical care in 2004. Health care spending accounted for 16% of the nation’s gross domestic product that year.

To contain inflation, the country needs to better align cost with quality of care, says American Benefits Council President Jim Klein. "Health care may be the only product or service in this country where we pay as much, or more, for poor quality as for excellent quality. That is totally upside-down," he remarks.

Article published by Benefit News 1-12-06.

posted by Mike @ 7:58 AM