U.S. Health Care Spending Rises At Record Pace

According to a study published Wednesday, the health care budget in the U.S. jumped to $1.424 trillion — an average of about $5,035 per person.

The annual report, published in the January/February issue of the policy journal Health Affairs, is the federal government’s most comprehensive look at the nation’s health care budget.

The report’s authors said the nation was feeling the effects of the recession, which followed months of growth and record employment where many companies offered lucrative benefit packages to lure workers.

“Government and employers are feeling enormous pressure on their ability to finance rapidly rising spending with resources that are growing more slowly,” said Katharine Levit, one of the authors of the study and the director of the National Health Statistics Group in the Office of the Actuary at the Centers for Medicare and Medicaid

The study reports that total budget of Medicaid, the state-federal health insurance program for the poor, grew 10.8 percent to $224.3 billion in 2001. Medicaid spending increased at double-digit rates for all services except nursing homes, Levit said. An 8.5 percent rise in Medicaid enrollment due to the recession contributed to the increased spending.

Medicare spending grew 7.8 percent, partly because Congress increased payments to health care providers.

Private health insurance premiums were more expensive for the fourth year in a row, rising 10.5 percent in 2001 to $496.1 billion, while benefits grew 10.1 percent. Consumer out-of-pocket spending increased 5.6 percent.

Prescription drug spending — which accounted for $140.6 billion of total health spending — continued to grow faster than all other areas. However, the study’s authors said the 15.7 percent growth rate in 2001 was down slightly from the previous year’s 16.4 percent rate — partly because of a slowdown in the introduction of new drugs.

Another of the biggest increases was in hospital spending, which grew 8.3 percent — the fastest growth for that sector in a decade. Much of this increase went to workers. Hospital employment grew 2.3 percent, and average hourly earnings for private hospital workers rose 6.1 percent in 2001. That compares to a 4.1 percent increase in average hourly earnings for all private workers.

Spending on physician and other clinical services rose by 8.6 percent in 2001, to $314 billion.

The study found that health care is becoming an increasingly large force in the nation’s economy, jumping from 13.3 percent of the gross domestic product in 2000 to 14.1 percent in 2001 — the largest increase since 1991.