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Life Health > Health Insurance

U.S. Health Outlays Rise To $1.7 Trillion

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U.S. health care costs continue to soar, and consumers, employers and insurers continue to disagree about the best way to respond.[@@]

A federal agency, a group of private researchers and 2 consulting firms painted that picture today with a barrage of survey reports.

The Office of the Actuary at the Centers for Medicare & Medicaid Services set the tone with a report showing that overall U.S. health spending grew “only” 7.7% in 2003, to $1.7 trillion, or an average of $5,670 per U.S. resident.

The growth rate was down from 9.3% in 2002, but CMS officials note that most of the slowdown was the result of successful efforts to hold down increases in spending on Medicaid, children’s health insurance programs and other government health programs to 6.6%.

Private health expenditures grew 8.6%.

Although the growth rate in private health insurance premiums fell to 9.3%, from 10.7%, consumers watched growth in out-of-pocket spending accelerate to 7.6%, from 6%.

The Bush administration and private health insurers have talked about controlling health cost inflation by limiting medical malpractice suits and encouraging use of high-deductible health insurance in conjunction with the new health savings accounts.

But researchers from the Henry J. Kaiser Family Foundation, Menlo Park, Calif., and Harvard University today published survey results that suggest that voters have only a moderate level of interest in health care costs this year and far less interest in seeing the country try to hold down cost increases by making consumers more responsible for seeking lower-cost doctors and services.

When the researchers surveyed 1,396 U.S. adults in November 2004, they found that only 10% identified health care as the single most important issue President Bush and Congress should deal with in 2005. Health care and “terrorism/national security” tied for third place on the list. The most frequently mentioned issue was the war in Iraq, with the support of 27% of the survey participants. The second most frequently mentioned issue was the economy, which was cited by 17% of the survey participants.

Researchers also asked the survey participants to rate the importance of 7 possible perceived reasons for rising health care costs.

The “number of malpractice lawsuits” ranked second, with the support of 22% of the survey participants, but “high profits made by drug insurance companies” ranked first, with the support of 29% of the participants.

Only 4% of the participants agreed that a lack of incentives for patients to look for lower-cost doctors and services is the most important factor. Lack of patient incentives ranked below factors such as the aging of the population and “doctors making too much money.”

When Kaiser-Harvard researchers asked survey participants to name health conditions that should be top priorities for Bush and Congress this year, cancer ranked first, with the support of 70% of the participants, and obesity ranked last, with the support of just 30% of the participants.

Fewer than 40% of the consumers surveyed for the Kaiser-Harvard study supported the concept of a “national health plan, financed by taxpayers,” but 70% said they support requiring “businesses to offer employees insurance.”

A third survey report, released by Hewitt Associates Inc., Lincolnshire, Ill., covers a survey of 500 large employers.

The participating employers expect their health coverage costs to increase about 12% this year.

Many of those employers are eager to use the kinds of “consumerist” tools promoted by insurers and the Bush administration, such as disease management programs and HSA programs, to hold down cost increases.

Hewitt researchers found that the percentage of large employers using disease management programs has increased to 83% this year, from 73% in 2004.

Although only 3% of the participating employers now offer HSAs for active employees, 57% are considering adopting HSAs in the future.

But participating employers continue to look for help from the government with cutting their health coverage costs and former employees’ health coverage costs.

“More than half feel that the government should make Medicare available to pre-65 retirees at [the employees'] own cost,” Hewitt researchers write in a summary of their firm’s survey findings.

Researchers at Watson Wyatt Worldwide, Washington, weighed in with a survey report that focuses on consumers’ views of HSAs.

When Watson Wyatt researchers polled about 1,000 U.S. residents with health coverage, they found that only 41% of the participants with annual incomes over $75,000 had heard of HSAs.

Although 52% of the survey participants said they would be interested in a plan that has “somewhat low premiums and a somewhat high deductible,” just 9% said they would like a plan with “very low premiums and a very high deductible,” Watson Wyatt says.


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