Inflation Spurs Health Spending in 2000
Health Affairs
January/February 2002
by Katharine Levit, Cynthia Smith, Cathy Cowan, Helen Lazenby , and Anne Martin
(The authors are in the National Health Statistics Group, Office of the Actuary, at the Centers for Medicare and Medicaid Services in Baltimore.)
"Historical spending trends through 2000 along with historical medical inflation and employment reports for the first half of 2001 indicate that the acceleration in health care costs will likely continue. This stands in stark contrast to recent reports of an increasingly sluggish U.S. economy. Pressure will mount on both public and private payers to finance accelerating health care costs out of decelerating incomes and revenues. Increased job layoffs in the slowing economy will lead to a less competitive job market, reducing private employers' incentive to shoulder rising health care costs, potentially increasing the number of uninsured persons. Competition may force employers to shift a larger share of rising costs to workers, who may no longer be able to afford accelerating out-of-pocket costs. Fewer employers may offer health insurance, and the recently unemployed are often left without coverage. Shrinking tax revenues will likely force government to evaluate health care priorities at a time when the need for coverage is rising. These national health spending estimates may well mark the end of an era of reasonably affordable health care cost growth."