Spending Reached $1.3T In 2000
By JANELLE CARTER
Associated Press Writer
JANUARY 07, 23:39 ET
WASHINGTON (AP) —
Americans' spending on health care rose 6.9 percent to $1.3 trillion in
2000, including a 17.3 percent boost in spending on prescription drugs,
the government says.
Health care spending
averaged $4,637 per person, up from $4,377 in 1999, the government said in
a report marking what its economists called the ``end of an era of
reasonable health care cost growth throughout most of the 1990s.''
The report, released
Tuesday by the Health and Human Services Department's Centers for Medicare
and Medicaid Services, said hospital spending in 2000 rose to $412
billion, a 5.1 percent increase over 1999. For the first time in five
years, nursing home expenditures increased, by 3.3 percent.
The higher spending in
all categories was attributed to the increased bargaining power of
hospitals and health providers for higher insurance payments and the aging
of the post-World War II baby boomers.
When managed care plans
first became popular, health care providers were often forced to deal with
payment caps. Now, more providers are rejecting the strict management of
costs by health plans, the report said.
As the population ages,
health care gradually is becoming a bigger component of the nation's
economy, rising from 13.1 percent of the gross domestic product in 1999 to
13.2 percent in 2000, the report said. It also indicated that health care
costs continue to outpace the overall inflation rate of 2.7 percent in
1999 and 3.4 percent in 2000.
Spending on prescription
drugs increased by even more, 19.2 percent, in 1999. The rise in 2000
represents the sixth straight year that the percentage increase in
spending on prescriptions was in double digits.
attributed the 2000 increase to the aging population and consumer demand
for newer, higher-priced drugs that are now marketed directly to them on
About 15 percent of
national health spending was out-of-pocket expenditures — a share
relatively unchanged since 1994. Prescription drugs were the largest
single component of out-of-pocket spending, 20 percent, according to the
Those paying those
out-of-pocket prescription drug costs are mostly seniors who have no
insurance coverage, the report said. Physician services accounted for 17
percent of out-of-pocket spending, and over-the-counter drugs for 15
``These new expenditures
are another indication that the burden on consumers is growing,'' said
Gail Shearer, who handles health cost issues for Consumers Union,
publisher of Consumer Reports magazine. ``It's been a pretty steady
increase over the past few decades. The big question is when will this
Economists said the
recession will create even more out-of-pocket expenses for health care
consumers as employers lay off workers and opt for less expensive
``In this environment,
employers are going to be inclined to choose less costly options for
health plans,'' said Cynthia Smith, a government health economist. ``Those
who are uninsured are going to have a difficult time paying for health
care services and those who are insured are looking at higher premiums.''
The report appears in the
January-February issue of the journal Health Affairs.
On the Net: Health Affairs: http://www.healthaffairs.org
Consumers Union: http://www.consumersunion.org