Health spending up 7.5% in 1st half of year

Increase is smallest since 2000, slightly less than two previous periods

December 02, 2004|By KNIGHT RIDDER/TRIBUNE

DALLAS - Health care spending grew 7.5 percent in the first half of 2004, the smallest increase since 2000 but only fractionally less than the two previous periods, according to a study to be released today.

The study, by the Washington-based Center for Studying Health Systems Change, suggests that the spending retreat has slowed after falling from a high of 10 percent in the second half of 2001.

And it means that employers will probably continue to shift more of the burden of health care costs to workers, industry executives and study authors said.

"The growth will remain consistent until there is some kind of major change in the health care system, and there doesn't appear to be anything like that on the horizon," said Bradley C. Strunk, the study's co-author. "The bottom line is this: There will be a continued trend of reduced employer-sponsored coverage and more underinsured or uninsured in this country."

One concern is that employees may be more reluctant to seek treatment if they know they will be hit with higher co-payments or deductibles. For example, hospital utilization grew 0.8 percent for the first six months of 2004. Two years ago during that same time frame, it grew 6.5 percent.

"When the employee bears more of the financial responsibility, they tend to be better stewards of their own money," said Marianne Fazen, executive director of Dallas-Fort Worth Business Group on Health, a coalition of local employers to monitor health care issues. "The whole system can't be sustained by double-digit increases to the employers each year. And those increases aren't being offset by profits."

The report calls for public debate on controlling costs - and "not just how to make health insurance more affordable."

"Over the long term, what needs to happen is we need to address the underlying drivers of health care spending, and not just find ways to shift costs from one party to the next," Strunk said. "We are finding new ways to treat people, but there isn't a consideration as to whether or not the new advances bring more benefits for the costs."

Darren Rodgers, senior vice president for Blue Cross Blue Shield of Texas, agrees, saying costs won't likely go down.

"There is some talk in the industry that costs may be on the rise now that the election is over," Rodgers said. "In election years, health services keep costs lower so it doesn't become a big issue."

Addressing consumers' needs with a flexible plan may be a first step, said Leah Rummel, executive director for the Texas Association of Health Plans.

"There are new products coming out that will give options - products that don't have bells and whistles but cover everything someone needs in case of emergency," she said. "Not everybody needs fertility treatments and not everybody needs hearing aids."

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