Pace of healthcare spending growth slowed in 2002

August 1, 2003
Pharmaceutical Representative

Healthcare spending per privately insured American jumped 9.6% in 2002.

Healthcare spending per privately insured American jumped 9.6% in 2002, according to a study by the Washington-based policy research firm The Center for Studying Health System Change.

The study looked at per capita spending on healthcare services commonly covered by employer-based private insurance, like inpatient and outpatient hospital care, physician services and prescription drugs.

Though the increase was slightly smaller than the 10% spending jump in 2001, 2002 healthcare spending still grew much more rapidly than the overall economy, which increased 2.7% in 2002 as measured by per capita growth in gross domestic product.

"The good news is that healthcare spending growth slowed for the first time in five years, but the bad news is that healthcare spending continues to increase rapidly," said Paul B. Ginsburg, co-author of the study and president of HSC.

Increases in all categories

Despite the slight decrease in 2002 spending growth, employer-based health insurance premium trends rose again in 2003, increasing an average of 15%.

Rapid growth in hospital spending - increasingly driven by price inflation rather than increased use of services - accounted for more than half (51%) of the overall spending increase for the second straight year.

Spending on prescription drugs rose 13.2%, slowing for the third year in a row and contributing 22% of the overall spending increase. Several factors help explain the slowdown, including increased use of three-tier co-payment structures, a reduction in new drug introductions and greater availability of generic drugs.

Spending for physician services increased 6.5%, accounting for 27% of the overall spending increase. Both higher prices and greater use of physician services played a role, but growing utilization was more important.

The study is available on the Health Affairs Web site at www.healthaffairs.org. PR