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Health-Care Spending Accelerated in 2000 As Hospital, Drug Costs Continued to Rise
WASHINGTON -- A new government report shows the pace of health-care spending accelerated in 2000 and that overall spending grew 6.9% to $1.3 trillion. In 1999, health-care spending had increased 5.7% to $1.22 trillion. The report by the Centers for Medicare and Medicaid Services, which oversees government health programs for the elderly, disabled and poor, found that public and private health-care spending, including inflation, averaged $4,637 per person in 2000. Hospital costs rose 5.1% to $412 billion in 2000, the first increase above 4% since 1993. Authors of the report attributed the increase to hospitals' successful bargaining for higher payments from insurers, loosening of strict policies by managed care plans, and a rise in labor costs. While hospitals contributed the most to the overall growth in health-care spending, prescription drugs were the fastest-growing segment, ballooning 17.3% to $121.8 billion in 2000. The report said more direct-to-consumer advertising by drug companies and insurance coverage of more drugs propelled the increase. The overall increase in health spending outpaced growth in the gross domestic product and signaled an end to the stability in health-care spending over the nine years through 2000. "This very well may be the end of an era," said Katharine Levit, an author of the report. "Now we are reverting to a more historical rate of spending growth when health care was growing faster than GDP." According to the report, health-care costs are likely to continue rising, and that could mean individuals may have to shoulder more of the financial burden. Others could be forced to go without insurance if they are laid off. In the private sector, the report found that spending increased mainly because insurance premiums rose and more consumers chose a less-restrictive form of managed care called preferred-provider organizations. The report noted that during the economic boom times from 1997-2000, employees could choose more-expensive health-care plans, and budget surpluses also allowed the government to spend more on Medicare. |
