Spending for privately insured Americans remains high
Center for Studying Health System Change October 2006 Tracking Health Care Costs: Spending Growth Remains Stable at High Rate in 2005
By Paul B. Ginsburg, Bradley C. Strunk, Michelle I. Banker, John P. Cookson
Health care spending per privately insured American increased 7.4 percent in 2005, marking the third year that the cost trend hovered below 8 percent, following a peak increase of 10.4 percent in 2001. Spending data for the first quarter of 2006 suggest continued stability—albeit at a relatively high rate of growth (7.7%). In 2005, health spending growth continued to outpace overall economic growth, despite a robust 5.4 percent increase in the overall U.S. economy as measured by per capita gross domestic product.
Trends in three of the five spending categories—inpatient hospital care, physician services, and other services—accelerated in 2005, while prescription drug spending grew at a slower rate for the sixth year in a row and hospital outpatient care spending growth slowed slightly.
Two key factors will tend to drive cost trends higher. One is the rapid expansion of specialty facilities, including hospital inpatient and outpatient facilities, freestanding centers and additional ancillary service capability in physician offices. The combination of supply creating demand and the effects of increased physician self-referral could mean that these expansions will increase spending. The continuing growth of obesity in this country is also a major cost driver. Kenneth Thorpe and colleagues estimate that 27 percent of real per capita growth in spending from 1987 to 2001 is attributable to increasing rates of obesity and increasing relative spending by those who are obese.
When listening to discussions in policy circles about the potential for a slowing of health care cost trends, one does not hear much about the factors outlined above. Instead, political leaders extol the potential for health information technology to save money by increasing quality of care and curbing duplication of diagnostic procedures, the potential of medical liability reform to reduce defensive medicine, the potential of quality improvements motivated by pay for performance to reduce costs and the potential for increased price transparency to lower health services’ prices substantially.
All or some of these scenarios may come to pass, but the most likely outcome over the next few years is costs continuing to outpace incomes and private health insurance becoming increasingly unaffordable for more people.
http://www.hschange.org/CONTENT/879/
Comment:
By Don McCanne, MD
There are many more factors involved in the increase in health care spending besides the two listed, especially obvious when the problems are framed more appropriately. Of most concern are the flaws that result in a very large amount of wasteful spending, well described in the policy literature.
We need solutions that specifically address these flaws. As this article indicates, current political efforts are neglecting the fundamental defects, but instead are diverting reform efforts by tinkering at the periphery with measures that will have negligible impact compared to the enormity of the problems.
When we know what is wrong and what needs to be done, it is tragic that we merely sit back and watch the tinkerers tinker.