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Life Health > Health Insurance

Health Costs Rise Faster Than Insurance Premiums

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Total U.S. private health insurance premium expenditures increased more slowly in 2006 than overall national health expenditures increased.

Researchers with the Office of the Actuary at the Centers for Medicare and Medicaid Services have included figures supporting that conclusion in a health care spending report published in Health Affairs, a health policy journal.

The analysis of the 2006 figures is the latest analys available from the CMS Office of the Actuary.

Spending on private health insurance premiums rose 5.3% in 2006, to $722 billion, the researchers at the office report.

Total U.S. health care spending increased 6.7%, to about $2.1 trillion, up from rate of increase of 6.5% in 2005, the CMS researchers write.

The 2006 health care spending total averaged $7,026 per person and amounted to 16% of the U.S. gross domestic product.

Despite reports about employers trying to shift more responsibility for paying for care to employees, consumers’ out-of-pocket health care spending increased just 3.8% in 2006, to about $256 billion, according to the CMS researchers.

America’s Health Insurance Plans, Washington, says the new national health expenditure report shows health insurance premiums grew at their slowest rate in 2006 since 1997.

In addition to holding down premium increases, “health insurance plans … are making significant progress in maximizing the value of employers’ and individuals’ health care dollars, as evidenced by the smaller increase in out-of-pocket and administrative costs compared to the increase in total health spending,” AHIP President Karen Ignagni says in a statement.

Other expenditure report findings:

- The CMS researchers found disturbing evidence of belt tightening at health research laboratories.

Excluding the cost of research on prescription drugs and durable medical equipment, health research expenditures increased just 2.9% in 2006, to $42 billion, down from 4.8% in 2005 and down from an average rate of increase of about 10% that has prevailed since at least the 1970s.

- In part because of implementation of the new Medicare Part D prescription drug program, Medicare spending soared 19%, to $401 billion.

The Medicare drug program may have contributed to an 8.5% increase in prescription drug expenditures, the CMS researchers write.

Drug expenditures increased only 5.8% in 2005.


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