Rising Health-Care Expenses Outpace U.S. GDP Growth WASHINGTON -- Health-care spending in 2002 outpaced the rest of the nation's economy, for the second straight year, despite a slowdown in the growth rate of prescription-drug spending. Overall, the U.S. spent $1.6 trillion in 2002 on health care, or $5,440 per person, according to a new Medicare study released Thursday. That figure represents an overall increase of 9.3%, twice the growth rate of the gross domestic product, the annual study said. "We've had two successive years of rather dramatic increases in the share of the GDP going to health care," said Katharine Levit, director of the National Health Statistics Group at the Center for Medicare and Medicaid Services, in a news release announcing the study. "This continued acceleration injects pressure into the health-care system, and everyone -- from businesses, to government, to consumers -- is affected," said Ms. Levit, co-author of the study, one of two on the matter published in the journal Health Affairs. Although prescription medicine had the largest percentage increase, the nation spent far more on hospitalization. For prescription drugs, the country's total for 2002 was $162.4 billion, compared with $486.5 billion for hospital care. Spending on prescription drugs grew almost twice as fast as all other health services, the study found. Medication costs, long blamed for soaring health-care costs, jumped 15.3% in 2002. In 1999, drug spending went up 19.7%. In 2000, it rose 16.4%, and in 2001, it rose 15.9%. The estimates in the study represent the federal government's official tallies of overall prescription-drug spending. A drop in the number of new drugs and the loss of patent protections for certain blockbusters accounted for the reduced growth rate for medication expenses, the study said. Just 17 new drugs hit the U.S. market in 2002, whereas in 2000 and 2001, there were an average 25 new drugs a year, down from 35 in 1999. "Much of the rise in spending over the past decade has been attributed to steady growth in use, which incorporates a shift in consumption to newer drugs with higher prices," Cynthia Smith, an economist at the Centers for Medicare and Medicaid Services, wrote in a separate study also appearing in Health Affairs, published by Project HOPE, a nonprofit health-policy organization. Experts don't predict the drug spending surge to end soon. Retail spending on prescription drugs "is expected to outpace overall health spending growth by an average annual rate of four percentage points over the next 10 years," Ms. Smith wrote. That portion is predicted to reach 14.5% in 2012. In 2002, retail spending on prescription drugs accounted for 10.5% of all health-care spending. That share has risen steadily since 1982, though drug costs have been at that rate before, Ms. Smith wrote. In 1960, drug spending was 10% of health-care spending, but health care represented a far smaller slice of the economy. The studies also noted that workers paid more out of pocket, to the tune of $212.5 billion. That is a 6% increase over 2001, the highest growth rate since 1998. Medicare paid $267 billion of the health-care tab in 2002, a 8.4% jump over 2001. The study said these sharp increases have prompted some employers to cut health benefits or eliminate jobs. "As consumers share more of the increases in cost, the value of health services will be more closely weighed against other purchases, underscoring the considerable value of some services and the discretionary nature of others," the study said. This story originally came from Dow Jones News Wires ... Return to the Media Section

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