Spending Growing Faster Than U.S. Economy
For the first time in
almost a decade, federal health economists reported January 8,
health expenditures outpaced the growth of the economy.
Spending rose 6.9% from
1999 to 2000, to $1.3 trillion, while the nation's gross
domestic product (GDP) grew 6.5%. This was the third year of
accelerating growth in health spending.
With the economy in a
downturn, health costs are likely to continue to grow faster
than the GDP at least for the next few years.
The shift may herald the
end of several years of relatively free-wheeling spending,
when employers offered less restrictive, more costly insurance
plans, and hospitals and physicians refused to accept onerous
managed care discounts, said the economists.
Instead, in 2001, insurers
will likely charge higher premiums and employers will ask
consumers to pay a higher share of their health costs.
From 1999 to 2000, there
was a 1.2% increase in the rise in health care spending.
Spending grew 5.7% in 1999, but by 6.9% in 2000. While this
may sound paltry, this is the largest positive change in the
growth rate since 1993.
Most of the increase in
private and public spending for 2000 -- 24% of the dollar share -- was for hospitals.
Hospital costs grew 5.1% in 2000 to $412
economists said that spending has grown partly because
facilities, merged together into ever-larger bargaining units,
are extracting higher payments from insurers, particularly
from managed care. Hospital labor costs have also increased.
drug spending accounted for 9.4% of the increase. But the cost
of drugs rose by 17.3% in 2000, the
sixth consecutive year of double-digit growth, according to
the authors. Consumers are being hit especially hard, paying
more out-of-pocket with each passing year. The economists said
that higher spending on outpatient drugs is being fueled by
direct-to-consumer advertising, more new drugs on the market
and increased coverage of pharmaceuticals by insurers.
Affairs January/February 2002
Like the late Senator
Everett Dirksen from Illinois was fond of saying when he was
referring to the Defense Department budget, a billion dollars
here, a billion dollars there and before you know it you are
talking real money.
Well we are talking a
lot more than a few billion dollars. How about something like
a nearly 1.5 trillion dollars, an amount that is even beyond
Bill Gates level.
Amazingly 25% of this
went to pay for hospital care.
The sad tragedy is that
we are spending all of this money on disease management
focused on drugs and surgery and our return on this investment
is profoundly poor.
We are not achieving
high levels of health that we could be. More and more people
do not have the energy they need to get through the day while
millions of others are suffering with painful crippling
diseases because they have violated basic health principles.
Many of their choices
were made out of ignorance and it is my vision and passion to
make a dent in this mess and I hope to have many of you help
with the process as this web site becomes a major force for
good and the alleviation of disease and suffering.