Surprise! Health costs still rising
Posted on January 12, 2009 by: Bill Salganik | Category: Costs and Cost Controls
At this point, it isn't news. But it is a reminder of why we need health reform, so here goes: Health costs are up again.
The increase is a little slower than the year before, but still well ahead of the rate of inflation or economic growth, meaning that health is eating up an increasing share of personal and national income.
Altogether, health spending represented 16.3 percent of GDP in 2007, up from 16.0 the year before, according to another new report, this one a study by the Centers for Medicare and Medicaid Services (CMS) in the January-February issue of the policy journal Health Affairs.
Spending was up 6.1 percent, according to CMS, in what is considered the most comprehensive report on health costs each year. Although CMS administers Medicare and Medicaid, the report covers all medical spending, including private insurance and out-of-pocket spending by patients. The growth was a little slower than the 6.7 percent rate the year before. But your pay didn’t go up 6.1 percent, did it?
The slight slowing was caused entirely by a decline in prescription spending driven by the shift to more generic medications. Hospitals, doctors, nursing homes and other major health spending categories continue to go up as fast as ever.
"Health care costs in 2007 may have increased less than in previous years, but they have still increased at a rate far greater than the general rate of inflation," Sen. Max Baucus, chairman of the Senate Finance Committee and author of a new health reform plan, wrote for the health care blog of National Journal. "And for millions of families and small businesses, affordable health insurance is still growing far out of their reach."
The increase pinches not just families and businesses, but government spending. "The rate of growth of spending on health care is the single greatest threat to budget balance over the long run," the Congressional Budget Office warned in testimony to Congress this month. (And a thanks to health economist Jane Sarasohn-Kahn, at her blog, Health Populi, for spotting that warning on page 31 of a dense report.)
