The nation's successful effort to tame healthcare spending could be history.
Healthcare expenditures spiked 5.6% to $1.15 trillion in 1998, according to HCFA, marking the largest annual percentage increase since 1993, which began an unprecedented period of slowed growth (See chart). The overall inflation rate in 1998 was 1.6%, according to the U.S. Labor Department's Consumer Price Index.
A full report on the nation's spending by HCFA's National Health Statistics Group will be published this week in the January/February issue of Health Affairs.
HCFA asserted that a surge in private-sector outlays and efforts to roll back Medicare cuts could mean a return to the days when healthcare accounted for a growing chunk of the nation's gross domestic product.
Healthcare's share of the GDP was 13.5% in 1998, up from 13.4% a year earlier.
But given the current economic boom, escalating costs are not causing general alarm as they did in the early 1990s.
Some numbers in the report could be used to bolster arguments for Medicare relief for institutional providers and a prescription drug benefit for the federal program, experts said.
Leading the spending wave are employers. According to HCFA, premiums for private insurance jumped 8.2% in 1998, more than twice as much as in each of the previous three years. Employers generally aren't passing additional costs onto employees, fearing it could hurt recruitment and retention.
Government's share of health spending declined in 1998 for the first time in 10 years to 45.5% from 46.2% in 1997, HCFA said. Medicare's annual growth rate sank to 2.5% from 6% in 1997.
Growth in hospital spending by Medicare, hospitals' largest payer, slowed to just 0.9% in 1998 from 5.6% in 1997.
The decrease was mostly caused by Medicare spending limits imposed by the Balanced Budget Act of 1997 and the first decline in average patient acuity since the prospective payment system was introduced in 1983, HCFA said.
Hospitals' share of the national spending pie continued to shrink. Hospital expenditures were $362.8 billion, up 3.4% from 1997.
Also hit were nursing home care- which accounted for $87.8 billion, up 3.7%, its slowest growth rate recorded since 1961-and home health spending, which tumbled 4% to $29.3 billion.
"There were (congressmen) who, when they passed the BBA, felt it made modest changes. I think this demonstrates it made significant changes," said James Bentley, senior vice president of strategic policy planning at the American Hospital Association.
In other sectors, the nation's prescription drug expenses jumped 15.4%, accounting for 8% of the national health bill, compared with 5.5% in 1993. Spending on physician services totaled $229 billion, up 5.4%.
The report comes as no surprise. HCFA's projection of a 5.4% increase in total healthcare spending for 1998, made last spring and released in the fall, wasn't far off the mark. Dramatic increases also are expected for 1999.
"I don't think numbers like this play significantly into the debate (over further refinements to the Balanced Budget Act)," said former Congressional Budget Office Director Robert Reischauer, now a senior fellow at the Brookings Institution.
"In healthcare, developments occur at warp speed, and 1998 is ancient history," Reischauer said.
Still, Chip Kahn, president of the Health Insurance Association of America, said he will be surprised if President Clinton doesn't mention the report to justify a prescription drug benefit for Medicare.
"It's the next greatest front after patient protection, and I think it's potentially a bigger one," Kahn said.