- The Washington Times - Monday, January 9, 2006

The United States spent nearly $2 trillion on health care in 2004 despite a slowdown in the pace of spending on prescription drugs, according to a government report released today.

Although the nation’s health care expenses increased 7.9 percent in 2004, compared with 8.2 percent in 2003, the total bill nearly doubled in a decade to $1.87 trillion, the report said.

Gary Claxton, vice president of Menlo Park, Calif., health research organization Kaiser Family Foundation, said he was concerned that health care expenses easily outpaced increases in wages and inflation.

“We’re spending more and more on health care all the time. It’s getting harder for consumers to afford the care they need,” Mr. Claxton said.

The study, by the Centers for Medicare & Medicaid Services (CMS), gives the latest government figures on the nation’s health spending habits. It found that prescription drug costs, which made up about 11 percent of all health costs, rose at a slower rate than sectors such as costs for hospital and physician visits.

Drug sales rose 8.2 percent in 2004, compared with 10.2 percent in 2003.

The study’s authors credited the deceleration in drug sales growth to fewer blockbuster drugs introduced during the study period. Also, the pharmaceutical industry released cheaper over-the-counter and generic versions of several top-selling drugs, which brought down overall drug costs, the researchers said at a Washington press conference yesterday.

“To make the judgment that we are out of the woods, we can’t say that at this point,” said Stephen Heffler, a study author and director of the National Health Statistics Group at CMS.

Consumers should expect to see prescription drug sales growth rebound this year with the Jan. 1 introduction of the Medicare drug benefit, Mr. Claxton said.

The program, called Part D, covers a large portion of drug costs for senior citizens and the disabled who are enrolled in the federal health insurance program.

CMS officials said they plan to release cost projections for the drug benefit next month.

Although the rate of increase for spending on drugs and health insurance premiums slowed in 2004, consumers faced higher costs for hospital and physician visits, the report said.

Consumers paid an average $6,280 in health care costs in 2004.

They saw hospital expenses surge 8.6 percent, compared with 7.5 percent in 2003, which brought total hospital costs to $570.8 billion.

The nearly $400 billion bill for physician and clinical services in 2004 reflected a 9 percent increase, compared with an 8.6 percent climb a year earlier, the report said.

Higher use of medical services, spurred by consumers switching from managed-care health plans to more flexible physician networks, contributed to the rising costs, said Cynthia Smith, a study author and CMS economist.

The study appears in today’s issue of Health Affairs, a health policy journal.

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