Health costs in Md. soar by 11.8%

Gain is the largest since state began keeping data in '95

January 17, 2003|By M. William Salganik | M. William Salganik,SUN STAFF

Spending for health care for Marylanders skyrocketed almost 12 percent in 2001 - the highest rate since the state began tracking health spending in 1995, according to a report released yesterday by the Maryland Health Care Commission.

"All service sectors are accelerating rapidly," said Ben Steffen, the commission's deputy director. The spending categories - inpatient care, physician fees, prescriptions, nursing home care - all grew by 10 percent or more from 2000 to 2001.

In all, $21 billion was spent by patients, insurers, employers and government programs to care for Marylanders, up 11.8 percent from $18.8 billion in 2000.

Hospital outpatient care, which shot up 18 percent, showed the sharpest increase. That includes emergency room visits, which, other studies have shown, are increasing rapidly in the state.

Of particular concern, Steffen said, is that out-of-pocket spending by patients grew slightly faster than payment by private insurance plans - 13 percent against 12 percent, showing that insurers and employers, by increasing co-payments and deductibles, were "shifting the burden back to the patient."

The commission compiles the health-spending data annually, mostly from health insurance claim records. Steffen said the Maryland data miss some health spending, such as amounts paid by workers' compensation and auto insurance.

Adjusting national data to match what is available in Maryland, Steffen said, the state's rate of increase compared with 9.2 percent in the nation. For 2000, the rates were 8.4 percent in Maryland and 7.4 percent nationally.

Prior to those years, Steffen said, Maryland health spending had grown more slowly than the national average. He attributed the change to the fact that Maryland had high HMO enrollment in the past, which brought tight controls on spending, but HMO membership has declined recently.

HMOs covered 34.9 percent of insured Marylanders in 2001, compared with 39.5 percent the year before, according to the report.

However, Jon Gabel, the author of several national studies on health spending, said he believed acceleration of spending nationally, closely paralleling the Maryland trends, stemmed from "a retreat from tightly managed care in the mid-'90s."

Not only were members moving out of HMOs, he said, but all health plans were dropping or reducing restrictions such as pre-authorizations for care and the use of "gatekeeper" physicians to control access to specialists.

Gabel, who is vice president for health system studies of the Health Research and Education Trust, said this resulted in "fewer constraints on providers."

This, he said, was more significant than the aging of the population, which has caused higher demand for health services. His studies, he said, indicate that aging was responsible for "maybe one of your 12 points" in percentage increase.

"If you look at our data nationally," he said, "claims expenses are still accelerating. I'm not sure we have any evidence that we've reached the peak."

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