Study: Health-Care Spending Growth Lowest Since 2000

December 12, 2003 ( - Health-care spending growth for privately insured Americans during the first half of 2003 slowed to its lowest level in three years, turning in an 8.5% hike, a new study found.

According to the Center for Studying Health System Change (HSC), the January through June 2003 increase was down from a 10% hike for the second half of 2002. The 2003 number represented the lowest growth since the first half of 2000 when it also increased 8.5%.

The Washington, DC-based research group said spending eased in all major health-care categories: inpatient hospital care, outpatient care, prescription drugs and physicians’ services. In fact, prescription drug spending lost the most momentum, rising only 8.5% in the first half of 2003, or nearly 5% less than the 13.4% hike in the second half of 2002. The first half of 2003 represented the first time since the mid-1990s that the drug trend did not grow at double-digit rates, HSC said.

Spending on hospital inpatient care grew 7.6% during the first half of 2003, down from the 8.3% increase in the last six months of 2002. Spending on outpatient care increased 12.9% in the first half of 2003, down from 14.1% in the second half of 2002. Outpatient care remains the fastest growing category of health-care spending, HSC said. Spending on physician services increased 6.1% during the first half of 2003 and was again the slowest growing category of health-care spending.

In contrast to the accelerating hospital price trend, the hospital utilization trend slowed markedly, growing just 2.5% in the first half of 2003, down from 5% in the latter half of 2002. The slowdown in the hospital utilization trend likely reflects the effect of increased patient cost sharing for hospital services and the completion of the transition to more loosely managed care.

The growth rate may be easing, but health-care costs are still high. In fact, health-care spending in the first six months of 2003 grew nearly three times faster than growth in the overall economy, as measured by 2.9% advance in per capita gross domestic product (GDP) during the same period.

That means cost-saving measures will still have to be a priority, HSC said. “Increased patient cost sharing is probably an important factor in the slowing of cost trends, but few experts expect this tool to substantially lower cost trends over the long term,” Paul Ginsburg, coauthor of the study and president of HSC, said in a statement. “Without more effective cost-control measures, the rising cost of health insurance will make coverage unaffordable to more and more Americans.”

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