U.S. Health Outlays Rose To $1.7 Trillion In 2003

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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 have painted that picture 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 say most of the slowdown was the result of successful efforts to hold down increases in spending on government health programs to 6.6%. Those moves ate away at coverage for the poor and moderate-income children enrolled in childrens health insurance programs and the poor enrolled in Medicaid.

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 administration and 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 published survey results that suggest voters have only moderate interest in health care costs this year and far less interest in seeing consumers made more responsible for seeking lower-cost doctors and services.

When the researchers surveyed 1,396 U.S. adults in November 2004, they found 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. Second was the economy, cited by 17%.

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% in the survey, but “high profits made by drug insurance companies” ranked first, with the support of 29%.

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.

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 firms 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,” according to the authors of the study.


Reproduced from National Underwriter Edition, January 20, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.