Medical Spending Continues to Rise

A feature story in the January 9, 2004 issue of the Boston Globe highlights just how expensive medical care is in the United States. According to the article medical expenses climbed at a much higher rate than the rest of the US economy. The article reports that according to the centres for Medicare & Medicaid Services, which tracks health care spending annually, employers, consumers, and government programs such as Medicaid spent $1.6 trillion, or $5,400 per person, in 2002 on medical care, a 9.3 percent jump over the previous year.

The major factor driving up the nation’s health care bill was spending on hospital services. According to the article Americans spent 9.5 percent more on hospital care over the previous year. This trend is partly because patients underwent more surgery and had more MRIs and other expensive diagnostic tests in 2002.

The study, originally published in the journal Health Affairs, said that consumers spent $212.5 billion out of their own pockets on co-payments and deductibles for hospital stays, doctors’ appointments, and prescription drugs. This represented a 6 percent increase from 2001. The total of consumers’ personal spending accounted for just 14 percent of overall health care costs.

Joseph Newhouse, a professor at Harvard Medical School and the Harvard School of Public Health observes, “The one thing we can say is the savings we had from managed care in the mid-1990s is a thing of the past. The question the study doesn’t answer, however, is whether the increased spending bought patients better health. In other words, was it worth it? Over long periods of time you can show the benefits of increased spending, but in any one given year, who knows?”