Health care up 5.3 percent for Marylanders in 1998

Increase breaks trend of slower cost growth, state agency reports

January 14, 2000|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

Marylanders and insurance companies spent $17 billion for health care in 1998, an increase of 5.3 percent over the previous year, according to a report yesterday by a state agency that monitors health costs.

The most rapid growth in spending came in prescription drugs, which grew by 13 percent because of increasing costs for existing drugs and the arrival of new drugs on the market, according to the report.

Medical and overall price inflation accounts for about half of the growth in total expenditures, although 1 percent is attributable to the population increase in Maryland. The numbers signal an end to a trend of slow growth in health care spending over the last five years, officials from the Maryland Health Care Commission said.

"After several years of slow growth rates, health care expenditures are again on the rise, especially in the private sector," said Donald E. Wilson, commission chair and dean of the Maryland School of Medicine. "These increases could have a significant impact on health care premium growth in the next year.

"The commission is especially concerned that premium increases will impact Maryland business and consumers' ability to purchase insurance coverage," Wilson said.

The state's 1998 figures are comparable to that of the nation's, where costs were up by 5.7 percent.

This is the commission's first analysis of total annual health care expenditures. Previous reports were issued by the Health Care Access and Cost Commission.

The information is provided, commission leaders say, to help payers, purchasers, providers, consumers and policy makers develop prudent initiatives to slow spending, while expanding access to insurance to 680,000 uninsured residents in Maryland.

Other major findings in the report include:

Hospital and physician services continued to account for the largest share of total expenditures at 34.1 percent and 24.9 percent, respectively. The numbers have not changed much compared with 1997.

"The changes in these two sectors are the major factors in overall spending and in the premiums that consumers will have to pay in insurance," said Ben Steffen, deputy director of the commission.

HMO enrollment in Maryland continues to be among the highest in the nation with 35 percent of all residents, or approximately 1.8 million people, covered. National enrollment in HMOs is only 29 percent. However, enrollment growth is slowing, rising 7.1 percent in 1998 vs. 10.1 percent the previous year.

All HMO growth occurred in the public Medicare and Medicaid programs. Private plans were stable.

Nursing home and home health agency expenditures fell by 6.6 percent and 4.5 percent, respectively, in 1998.

Declining nursing home occupancy rates and the 1997 Federal Balanced Budget Act were major contributors to those declines, according to the report.

Maryland residents, regardless of race, are more likely to have health insurance coverage than the national average. Compared with the nation, state residents are more likely to be covered by private insurance, and those with Medicare are more likely to have supplemental insurance.

While the state continues to be one of the wealthiest in the nation, about 13.8 percent of Maryland residents do not have insurance, the report said.

"Although the results are not as positive as in past years," Wilson said, "by bringing this information into the open, we are in a position here in Maryland to understand how the dynamic changes taking place in the health care environment generally affect our ability to access needed care."

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