A Commerce Department report released last week provided new fuel for the healthcare reform movement with its prediction that healthcare spending would top $1 trillion in 1994.
That sobering estimate was a reminder of the limitless path that healthcare spending will take if effective cost constraints aren't implemented.
Without changes in current healthcare policy, spending will grow at an average rate of 13.5% annually for the next five years, the department said in its annual Industrial Outlook.
The report predicted that Congress would reform the healthcare system after intensive debate, but it warned that healthcare expenditures would continue to climb, as providers found "alternative means to increase healthcare prices, shift prices, hoard inventories and incur capital costs to be passed on to consumers."
Richard Pollack, the American Hospital Association's executive vice president for federal relations, wasn't surprised by the report's predictions about continued spending growth, noting that "the challenge is to reduce the rate of growth."
Overall, healthcare spending will grow 12.5% this year, compared with 12.1% last year, the report predicted.
Spending in 1994 will reach $1.06 trillion, or 15% of the gross domestic product. Hospital spending will rise 12.5% to $409 billion, while spending on physician services will grow 11% to $195 billion.
President Clinton's reform plan intends to reduce the rate of increase in healthcare spending to that of inflation, plus an adjustment for population growth, by limiting the growth of private insurance premiums and massively cutting federal healthcare programs. Hospital representatives are becoming increasingly alarmed by the potential financial effects of the plan's approach.
Some trade associations, including the AHA, are scrambling to create financial models to show the impact of healthcare reform on hospitals, hoping to show lawmakers the deleterious effect that some provisions of the Clinton healthcare reform plan would have.
The Hospital Association of New York State has completed a nationwide model of winners and losers, showing that inner-city hospitals have the most to lose under reform, said Stephen Cooper, HANYS' vice president. The group will wait to reveal the results until Congress returns to work on healthcare reform later this month. Then the findings will have greater political impact, he said.
However, some industry executives shun such forecasts. Michael Bromberg, executive director of the Federation of American Health Systems, said his organization wouldn't prepare models of the effects of the Clinton plan because it could prompt efforts to protect poorly run hospitals from closing.
"The federal goal is not to prop up every bad hospital in America," Mr. Bromberg said.-Lynn Wagner