2002 cost trend slows; but angst for future grows. (Perspectives).

Publication: Medicine & Health

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COPYRIGHT 2003 Thomson Financial Inc.

This is the first in a Perspectives series on healthcare cost trends, their causes and potential effects.

Health care spending per privately insured person increased 9.6 percent in 2002, slightly less than 2001's 10 percent spending rise. It was the first time in five years that annual spending didn't grow by a bigger percentage than it had grown the previous year.

That's the good news in a study by Bradley Strunk and Paul Ginsburg of the nonpartisan research group Center for Studying Health System Change (HSC), published June 11 on the Web site of the journal Health Affairs. Spending in 2002 grew by 0.4 percentage points less than it did in 2001. That's in contrast to the 1996-2001 period, during which "the spending trend steadily accelerated by a factor of five, from 2 percent to 10 percent."

The "trend in 2002 could signal that some of the driving forces behind the ever-larger increases in health spending over the past half-decade began to wane" last year, say the analysts. For example, increased employee cost sharing may be reining in utilization slightly. Insurers may have completed their retreat from the stricter forms of managed care, so the fast utilization growth associated with that retreat may be ending. An earlier flood of innovative technologies emerging from the pharmaceutical industry also continues to slow.

But while there's a bit of news about modest slowing of growth, most of the news--including in the HSC analysis--tells a different story: that health-care spending continues to grow much faster than the overall economy, and that trends that push the growth likely will continue unabated.

Anatomizing last year's trends, HSC reports the...

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