Health-care cost rise moderated in 1995 Decline paralleled increase in HMOs, state agency reports

March 07, 1997|By M. William Salganik | M. William Salganik,SUN STAFF

Marylanders shelled out $14.3 billion for health care in 1995, an increase of 1.5 percent over the previous year, a state health cost monitoring panel reported yesterday.

Last year, the Health Care Access and Cost Commission reported that health costs had increased 4.3 percent from 1992 to 1993.

John M. Colmers, who is executive director of the commission, said the 1.5 percent increase represented "historically low levels."

However, he said, there is evidence that "the cost problem is on a rebound," marked by increases in insurance premiums and a report by another state commission that hospital costs increased last year by 4.5 percent, about double the national rate.

"I don't think any of us should be lulled into a false sense of security that the cost tiger is under control," he said.

The commission's annual report showed that in one key area of health care, physician services, spending actually declined 3 percent in 1995.

Physician services accounted for 23.2 cents of each health dollar spent, the second-largest category after inpatient hospital treatment (30.7 cents).

Colmers said the drop in spending on doctors resulted from "the growth of HMOs in the state and the lower prices they are able to extract from doctors."

He said the commission's data "adds validity to the anecdotal evidence one hears from physicians about changes in the marketplace."

HMO membership in Maryland increased 9.7 percent over the year, while enrollment in other types of health insurance declined 7.6 percent, the report said.

The cost for members of commercial HMOs averaged $1,166 in the year, compared to $1,387 -- 19 percent more -- for Marylanders with other types of commercial health insurance.

HMOs spent less than other insurers on hospital treatment (20.2 cents of each dollar vs. 45.5), but more on doctor services (40.9 cents vs.20.3)

Colmers said it was not possible from the data to determine whether that resulted from cost controls by HMOs or from healthier patients choosing HMO plans.

Yesterday's report on health spending differs in several key ways from the report the day before on hospital costs by the Health Services Cost Review Commission.

The cost review panel has authority to regulate hospital rates, and the figures it generates are cranked into a formula which will mean hospitals will get 3.86 percent less in rates over the next year than they would otherwise have gotten.

The cost and access commission has no regulatory power; it was created to collect data and monitor trends.

Also, the hospital report is based on complete records of the cost of each case. Yesterday's report by the cost and access commission, Colmers said, is "an estimate rather than an accounting technique." While it collects some billing data from insurers, the commission also draws on other data sources and uses statistical techniques to make estimates in areas where it cannot collect data directly, such as spending for health costs not covered by insurance and hospital services received by Marylanders out of state.

Next year, the commission's report will be based on more information from insurers, who are required to submit it for the first time this year.

But some physicians, psychiatrists and civil liberties groups, concerned about the state collecting so much personal data, are seeking to change the rules to require patient consent.

State officials have defended the data collection as having sufficient safeguards, such as coded patient numbers, to safeguard privacy.

The additional data, Colmers said, will allow the commission to analyze such questions as whether HMO members are less likely to be referred to specialists than patients with other types of health insurance.

Other findings in yesterday's report include:

Private insurance pays 39.7 cents of each health dollar in Maryland; Medicare, 22.9 cents; Medicaid, 15.1 cents. Services not covered by insurance account for 10.7 cents, and patients pay an additional 5 cents of each health dollar in deductibles and co-payments.

For each dollar paid to doctors, 32.2 cents goes to primary care physicians and 21.4 cents to surgeons.

Per-capita health spending in the state was $2,648. Spending was lowest in the Washington suburbs, at $2,303.

Colmers said that region has fewer Medicare and Medicaid patients, who tend to incur higher costs, and higher HMO penetration, providing more cost controls.

Spending was highest in Western Maryland, at $2,885.

Maryland health spending

QG................... ..............1995 ............1994 .........% Chg

Hospital care

Inpatient................ ........4,399.2 .........4,224.5 ........4.1

Outpatient ............. ...........866.7 ...........870.8 .......-0.5

Physician services ...... ........3,327.6 .........3,429.5 .......-3.0

Other professional ....... .......2,061.9 .........1,997.7 ........3.2

Prescription drugs ....... .........982.7 ...........989.3 .......-0.7

Nursing home care ........ .........820.1 ...........792.7 ........3.5

Home health care ......... .........304.1 ...........296.7 ........2.5

Other services ............ ........319.7 ...........316.3 ........1.1

Unallocated expense ....... ........268.7 ...........208.3 .......29.0

Administrative cost ........ .......994.3 .........1,002.6 .......-0.8

Total ........ .................$14,345.1 .......$14,128.3 ........1.5

In millions of dollars

Source: Health Care Access & Cost Commission

Pub Date: 3/07/97

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