Healthcare inflation for privately insured patients held steady in 2004, but at 8.2% the stagnant healthcare spending growth was seen as cause for concern rather than relief.
"I think it's bad news because the growth rate is so high," said Paul Ginsburg, president of the Center for Studying Health System Change, a Washington-based policy group, and co-author of the study on healthcare cost growth.
Private healthcare spending growth hovered around 3% to 4% in the mid-1990s with the mounting dominance of managed care. The rate of private healthcare inflation then climbed steadily to a peak of 11.3% in 2001, before easing slightly and reaching a plateau in 2004, according to the study, published last week in Health Affairs.
Many had hoped growth rates would keep falling, but competing forces make it likely that the plateau will continue in coming years, Ginsburg said.
That's troubling partly because overall economic growth has not kept pace. The gross domestic product, for example, grew 5.6% per capita in 2004. The difference could squeeze some employers out of the private-insurance market and push more Americans into the ranks of the uninsured, Ginsburg said.
"Although there is no clear consensus ... in this country about how best to control costs, the imperative to continue that debate and act in some fashion remains as high as ever," the study's authors wrote.
According to the study, the rate of private-sector healthcare spending growth barely changed in 2003 and 2004 in nearly every segment-inpatient, outpatient, physician and an "all other" category including home health and ambulance services.
Only one category, prescription drugs, saw a noticeable slowdown, rising 7.2% in 2004 compared with 8.9% in the previous year. Drugmakers, however, have been under considerable political pressure to limit price increases and businesses have increasingly implemented strict formularies. The drop marked the fifth consecutive year of slower growth in drug spending.
Spending on hospital services, both inpatient and outpatient, grew 10.1%, compared with 9.9% in 2003 and 11.8% in 2002. A 1 percentage point decrease in the rate of hospital price inflation was offset by more rapid growth in use, according to the study.
Caroline Steinberg, vice president of trend analysis at the American Hospital Association, said it's hard to tell if healthcare spending growth will flag or accelerate. "I think it's always good news that it didn't go up," Steinberg said of the 2004 growth rate.
Steinberg argued that analyzing spending by location of care can't help policymakers or providers determine the value of care. New medical technology may come with a high price tag but deliver long-term savings and better quality of life, she said. "These numbers don't give us the information we need," she said.