Health Care Spending Up 8.7%

January 8, 2003 ( - Spending on health care soared to $1.4 trillion dollars in 2001, according to a Reuters report.

The increase of 8.7% from 2000’s total health care budget represents the largest percentage increase in 10 years.   Fueling this increase was the amplification of expenditures in Medicaid, hospital services and prescription drugs, the article stated, citing an annual report produced by the Department of Health and Human Services.  

Medicaid saw increases of $224.3 billion, recording a double-digit rise in all services except nursing homes.   Additionally, private health insurance premiums experienced their own double-digit rise, up 10.5% to $496.1 billion.  

Hospitals, facing staffing issues in 2001, experienced a spending swell of 8.3%, totaling $451.0 billion of the total 2001 health care budget.   The report said the majority of this increase went to hospital staff, as employment was boosted 2.3% and average hourly earnings enlarged 6.1%.  

Further, the cost of benefits and the fees paid by consumers saw similar boosts.   Benefit costs rose 10.1% and consumer out-of-pocket spending increased 5.6%.

The other increases in health care spending were felt in physician services and prescription drugs.   Physician and other clinical services rose by 8.6% to $314.0 billion, while prescription drug spending totaled $140.6 billion in the overall budget.

However, employers, who traditionally swallow a large burden of the total health care spending, may already by moving to cut costs associated with the increase, according to Katharine Levit, director of the National Health Statistics Group in the Office of the Actuary at the Centers for Medicare and Medicaid.

“Historically, jumps of this size have been closely followed by major initiatives in the private and/or public sector to reduce spending growth,” Levit said in a statement.