Health Care Spending Trends Down Slightly

Health care spending growth for privately insured Americans slowed in the first half of 2003, according to a study released last December by the Center for Studying Health System Change (HSC).

The growth was 8.5 percent as contrasted to growth of 10 percent in the second half of 2002. The 1.5 percent decline was the largest six-month drop since the early 1990s. Prescription drug spending slowed the most, rising only 8.5 percent in the first half of 2003, nearly 5 percentage points less than the 13.4 percent increase in the second half of 2002.

Despite the decline in the rate of growth, health care spending in the first six months of 2003 grew nearly three times faster than growth in the overall economy.

“Increased patient cost sharing is probably an important factor in the slowing of cost trends, but few experts expect this tool to substantially lower cost trends over the long term,” said Paul B. Ginsburg, Ph.D., co-author of the study and president of HSC.

He and co-author Bradley Strunk concluded, “The slowing of underlying cost trends is likely to bring an end, perhaps in 2004, to the long period of accelerating employer-sponsored health insurance premium trends, which reached a peak in 2003 at 13.9 percent. . . . However, cost and premium trends are still likely to remain well in excess of trends in gross domestic product for the foreseeable future.”

“Tracking Health Care Costs: Trends Slow in First Half of 2003” is posted online at www.hschange.org/CONTENT/633/. ▪