NATION Health care costs are growing faster than economy, study says

Employers are expected to continue shifting costs to workers.
SCRIPPS HOWARD
WASHINGTON -- Health care costs grew faster than the overall economy in the first half of this year, according to a study released today.
Although the increase in spending remained below double-digits, health costs for each privately insured American rose by 7.5 percent -- almost the same pace as last year, driven largely by steeper hospital rates.
During the same period, the per capita gross domestic product -- the amount that would be available if it were divided equally among Americans -- rose by 5.9 percent, according to the Center for Studying Health System Change and the Employee Benefit Research Institute.
"Health care costs are likely to continue growing faster than workers' income for the foreseeable future, leading to more uninsured Americans and raising the stakes for policymakers," said Paul Ginsberg, president of the center, a nonpartisan policy research organization.
Impact
Research and experience have shown that if health costs rise faster than wages, fewer workers feel they can afford coverage, particularly as employers require more of them to pay all or a greater share of the costs.
"Even though health care cost increases have moderated compared to recent years, as long as they are increasing faster than wages and overall inflation, both public- and private-sector employers will continue to try and control those costs," said Dallas Salisbury, chief executive of the non-profit benefit institute.
"That includes examining ways to shift costs to workers and probably a movement toward account-based health plans [where employers pledge a fixed amount for workers to use to pay for insurance and health savings accounts]."
Although prescription drug prices are often blamed for rising health costs, the costs are not increasing as sharply as they did in recent years since more managed-care restrictions have been imposed on the use of top brands. Spending on prescription drugs during the first half of 2004 was up 8.8 percent, compared to 9.6 percent in the last part of 2003 and far less than the 19.5 percent peak growth experienced in the last six months of 1999.