01-16-2004 - Laserfiche WebLink

Home Browse Search

Both per capita spending on health care and the portion of the U.S. economy that health care makes up have grown almost without interruption for 40 years. In general, efforts to • control costs over that time have at best succeeded in slowing the year-to-year increases in spending. Efforts have not stopped the increases or cut spending. The last time the brakes were applied was in the early 1990s, when various practices that came to be known as "managed care" forced doctors and hospitals to accept lower payments, and wrested from patients much of their ability to get whatever care they wanted and that their doctors thought they needed. As a result of the managed care revolution, health care spending grew by only 5 percent in 1996, 5.1 percent in 1997 and 5.3 percent in 1998. Annual growth began to accelerate, however, as patients, doctors and hospitals successfully rebelled against what they viewed as strong-arm tactics by insurance companies and interference in clinical decisions by medical "auditors." In 2001, health care spending rose 8.5 percent over that in 2000; in 2002, it grew an additional 9.3 percent. By contrast, the GDP rose by 3.6 percent in 2002 over the previous year. In five years -- 1997 to 2002 --the share of the total U.S. economy devoted to health care grew substantially, from 13.1 percent to 14.9 percent. That increase reflects more medical care and the recent slower growth of the economy, said Katharine Levit, lead author of one of the articles. Spending on prescription drugs taken outside the hospital rose about 15 percent in 2002 and "far outpaces the spending growth for other health services," said Cynthia Smith of the Centers for Medicare &Medicaid Services. Most of the increase was the result of patients getting more prescriptions and switching from old, cheap drugs to new, expensive ones, rather than the product of simple inflation in prices. Those first two trends were caused by the increase in the number of health plans offering prescription drug coverage, which is giving patients access to many medicines they could not or would not have paid for on their own. Recent changes to the Medicare program that will offer elderly and disabled Americans the opportunity to buy inexpensive prescription drug coverage are likely to continue those trends. In offering that coverage, the government will not negotiate with drug companies directly on drug prices, but will leave that up to various private companies managing the new benefit. Joseph P. Newhouse, a Harvard University health economist, said he believes that policy will eventually be changed, as policymakers seek new ways to rein in medical expenses. He speculated the government will especially want to gain leverage in situations in which a single company makes a drug for which there are no alternatives. "The government cannot be put in the place of paying any price a manufacturer wants for iits product," he said at a news conference here yesterday where the data were presented.