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Reprieve from Faster-Growing Health Care Spending Stalled in 2004
Health Affairs Study Shows Prescription Drug Spending Growth Slowed for Fifth Year in a Row
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Health spending growth continued to outpace overall economic growth by a wide margin2.6 percentage pointsin 2004, despite a robust 5.6 percent increase in the overall U.S. economy as measured by per capita gross domestic product, the study found. After peaking at 11.3 percent in 2001, health care spending growth slowed in 2002 and 2003 but now has leveled off at a relatively high rate.
"If health care spending continues to grow at a significantly faster rate than workers incomesand theres every sign that it willhealth insurance will become unaffordable to more and more people," said Paul B. Ginsburg, Ph.D., coauthor of the Health Affairs study and president of HSC, a nonpartisan policy research organization funded principally by The Robert Wood Johnson Foundation.
Although underlying health spending growth stabilized, the slowdown in employer-sponsored health insurance premium growth continued. In 2005, estimated average premium increases ranged from 8 percent to 10 percent, down from an average 12 percent in 2004.
For the fourth year in a rowalthough to a lesser degree than in recent yearsemployers in 2005 increased patient cost sharing, through higher deductibles, copayments and coinsurance, as a way to cope with high premium increases.
"Employers appear either to have reached what they consider the limits of acceptable patient cost sharing or to feel less pressure to shift costs to employees in light of the improving economy and recent decline in the premium trend," said Bradley C. Strunk, an HSC researcher and study coauthor, along with John P. Cookson of Milliman Inc.
Trends in four of the five spending categoriesinpatient and outpatient hospital care, physician services, and other servicesstabilized in 2004, while prescription drug spending grew at a slower rate for the fifth year in a row. Key findings include:
The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nations changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by The Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.
Health Affairs, published by Project HOPE, is the leading journal of health