Health Spending Leads Economic Growth

June 21, 2005 ( - Even though cost-shifting the increased expense of workplace health coverage to employees has slowed the growth of such expenses to single digits, a new study found that health spending is still outpacing general economic growth.

The study , published in the policy journal Health Affairs, asserted the growth of health costs, when measured against the pace of overall economic growth, will force patients to shell out even more than they do now for insurance, prescriptions, and hospital care.

The research found that health spending for Americans with private medical insurance increased 8.2% in 2004 – significantly ahead of the 5.6% advance in total domestic spending on all goods and services.

“If health care spending continues to grow at a significantly faster rate than workers’ incomes – and there is every sign that it will – health insurance will become unaffordable to more and more people,” said study author Paul Ginsburg, president of the Center for Studying Health System Change.

The study said that annual increases in health insurance premiums have slowed, with average rate hikes for 2005 hovering around 8% to 10%, down from 12% the year before. Spending grew 11.3% at outpatient hospitals, such as specialty surgery centers and imaging facilities. At traditional hospitals, spending was up 6.2% in 2004.

Prescription drug spending for patients with private health coverage slowed for the fifth straight year, climbing 7.2% in 2004, compared with 8.9% in 2003. This was attributed to more generic and over-the-counter medications for ailments that could previously only be treated by more expensive brand-name prescription drugs.