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Health Care Spending Increases for 6th Year Two Reports Depict Nearly Unbridled Growth . By David Brown Washington Post Staff Writer Friday,January 9,2004;Page A03 Health care spending in the United States grew by 9.3 percent in 2002 over the previous year, driven by rising costs for hospitalization,physician services, home health care and especially prescription drugs. The increase in 2002 marked the sixth year of accelerating growth in health care expenditures, which now account for nearly 15 percent of the nation's gross domestic product. This is double the size of health care's share of the American economy 30 years ago. Two reports released yesterday by government economists sketched a picture of a health care sector -- fueled by medical innovation and the backlash against managed care -- growing virtually unchecked. In the United States, health care spending now averages $5,440 per person, roughly double the amount spent in European countries. "This report is distressing but not surprising. The pressure from the last round [of cost containment] is off, and we haven't replaced it with anything," said Gail R. Wilensky, an economist who headed the federal government's Medicare program a decade ago and is • now at the Project Hope research organization. Her assessment was shared by Edward F. Howard of the Alliance for Health Reform, a nonprofit educational group. "This is in some ways appalling but not very surprising. There is an inexorability to it that is very hard to be optimistic about," he said. Drew E. Altman, president of the Kaiser Family Foundation, a nonprofit research firm, said that unlike in the late 1980s -- a time when health care expenses were also rising fast -- "now there is a sense that we have no answers." People have soured on the market-driven strategies of managed care, and direct government regulation of medical expenses imposed by European countries is anathema, Altman said. For the immediate future, the only available strategies will be ones with marginal effects, such as making patients pay more and seeking savings through better management of expensive chronic diseases such as congestive heart failure. "Nobody has any idea what the new paradigm is going to be" for holding down costs, he said. The two reports appear in the journal Health Affairs and were written by researchers at the Centers for Medicare & Medicaid Services, an agency within the Department of Health and Human Services. The researchers charted health spending trends through 2002, the latest year for which complete data are available. •