Health-Care Spending Reaches $1.6 Trillion in 2002

January 9, 2004 ( - United States' health-care spending rose 9.3% in 2002, reaching an aggregate of $1.6 trillion.

Among the notable increases in 2002’s health-care spending was a 9.5% rise in hospital spending, reflecting increasing use of hospital services, rising wages of hospital workers and hospitals’ growing ability to negotiate prices with private insurance plans. And even though a decrease from 2001’s number, prescription drugs costs were still up 15.3%, the fastest-growing item in health care, according to data by the Centers for Medicare and Medicaid Services cited by the Associated Press.

The overall health-care cost increase outpaced growth in the economy for the fourth consecutive year and now composes nearly 15% of the nation’s economy. Trends show this number will only grow, accounting for as much as 17.7% of the country’s gross domestic product (GDP) by 2012.

With a $1.6 trillion price tag, health-care spending per person average approximately $5,440 in 2002, after e xperiencing the largest increase in 11 years. Private insurance shelled out $549.6 billion, 35% of the total. Out-of-pocket spending and other private sources made up $290 billion (19%) and public funds paid $713.4 billion (46%), led by the Medicare and Medicaid programs.

Good news was found in the Centers for Medicare and Medicaid Services’ projections for 2003, where agency says early indications are that spending slowed.“We are expecting some slowdown to occur … as a result of the economic slowdown,” Katharine Levit the lead author of the report, said at a news conference.