Rising hospital costs continue to be a key factor driving growth in national healthcare spending, according to the Blue Cross and Blue Shield Association's third annual Medical Cost Reference Guide. Inpatient and outpatient care at hospitals accounted for more than half of the growth in spending by the private insurance industry from 2002 to 2003, the guide said. The average cost per hospitalization climbed 5.4% in 2002 to $7,000, an increase attributed to hospital consolidation, higher labor costs and greater use of expensive technology, particularly diagnostic imaging. For example, the number of MRI scans performed nationally is projected to grow 67% to 500 million in 2008 from 300 million in 2001. The association first published the guide in 2002 as part of a broader initiative to help keep healthcare affordable. The guide is largely a compendium of secondary research.
Other key cost drivers identified in the guide include direct-to-consumer advertising by drug companies, the growing number of uninsured and an aging population. According to the guide, private insurers' administrative costs and profits -- the latter of which has averaged between 2% and 3% over the past four years -- "remain small components" of premium growth. In a separate report last month, the association said combined net income of the nation's 41 independent Blues plans rose 32% to $3.7 billion in the six months ended June 30. Read the association's cost guide. -- by Laura B. Benko