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Health care spending growth slows

Health care spending growth slowed to its lowest level in three years as people had higher out-of-pocket costs for medicines and services previously covered by insurance, a new study found.
/ Source: The Associated Press

Health care spending growth slowed to its lowest level in three years as people had higher out-of-pocket costs for medicines and services previously covered by insurance, a new study found.

Experts believe those confronted with higher co-payments and deductibles often chose to go without care _ depressing overall spending.

Spending on privately insured Americans increased 8.5 percent from January through June of this year, down from a 10 percent increase in the second half of 2002, according to the Center for Studying Health System Change. Health care spending growth hasn't been this low since the second half of 2000, when it was also 8.5 percent.

Spending eased in all major health care categories: inpatient hospital care, out patient care, prescription drugs and physicians services. Prescription drug spending lost the most momentum, rising only 8.5 percent in the first half of 2003, or nearly 5 percentage points less than the 13.4 percent increase in the second half of 2002.

"As patients are having to share more of the costs, the fact is that more and more patients go without care," said Paul Ginsburg, president of the Washington D.C.-based center.

Ginsburg attributed tapering off in drug spending to several factors, including the wildly popular allergy medication Claritin becoming an over-the-counter product. Insurers don't pay for nonprescription medicines.

He also said drug copayments had been increasing longer and more dramatically than other types of deductibles.

Ginsburg said it is too early to determine if the trend is adversely affecting patients' health because some drugs or services a patient chooses to skip might not have been necessary. However, he said "there will come a point when you won't want to go any further with cost sharing" because if care becomes prohibitively expensive, patients' health will suffer.

However, experts agree that as health care costs continue to rise, cost sharing will continue.

Earlier this week Mercer Human Resource Consulting said the jump in the average cost of providing health benefits for an active employee in 2003 was less than originally expected _ 10 percent instead of 14 percent. But that's only because when employers were faced with another year mid-teen increases, they searched for ways to save money and succeeded by passing more costs on to employees.

"Employers couldn't see another way to bring down costs without shifting to employee," said Barry Schilmeister, a principal at Mercer.

In its survey of 3,000 companies, Mercer found employers were asking their workers to pay more of their health insurance premium as well as higher copayments and deductibles.

The survey found that employers asked single employees to pay 35 percent of their health maintenance organization premium, up from 31 percent last year. The family contribution rose to 57 percent from 50 percent.

It also found that 34 percent of preferred provider plans had deductibles of $1,000 or more. That's up from 20 percent last year. Meanwhile, the median out-of-pocket maximum jumped from $1,500 to $2,000.

The study also found that while the average doctor co-payment for a health maintenance organization is $15, but one-third of HMOS require a payment of $20 or more. In addition, 16 percent of employer said they reduced the amount of services and drugs covered by the plans.

Spending on inpatient hospital care grew 7.6 percent during the first half of 2003, down from 8.3 percent in the last six months of 2002. Spending on physician services increased 6.1 percent during the first half of the year, down from 7.1 percent in the second half of 2002.

Meanwhile, spending on outpatient care increased 12.9 percent, the fastest growing category of health spending, even though that was down from the 14.1 percent hike in the second half of 2002.

Ginsburg said outpatient spending continues to expand rapidly because technological advances allow more tests and procedures to be conducted outside the hospital.

The study is conducted using data from the Milliman USA Health Cost Index, the U.S. Bureau of Labor Statistics and the Producer Price Index for general medical and surgical hospitals.