Content area
Full Text
Once again, hospital spending drives total health spending upward.
ABSTRACT: U.S. health care spending climbed to $1.6 trillion in 2002, or $5,440 per person. Health spending rose 8.5 percent in 2001 and 9.3 percent in 2002, contributing to a spike of 1.6 percentage points in the health share of gross domestic product (GDP) since 2000. Hospital spending accounted for nearly a third of the aggregate increase. During the past three decades, per enrollee spending for a common benefit package has grown at a slightly slower average annual rate for Medicare than for private health insurance, with more pronounced growth differences recently reflecting legislated Medicare reimbursement changes and consumers' calls for more loosely managed care.
GROWTH IN HEALTH SPENDING rose from 8.5 percent in 2001 to 9.3 percent in 2002, advancing much faster than the rest of the U.S. economy for the second consecutive year. It rose at more than twice the rate of growth of gross domestic product (GDP, 3.6 percent), causing health spending's share of GDP to rise from 13.3 percent in 2000 (where it had remained largely unchanged since 1993) to 14.1 percent in 2001 and 14.9 percent by 2002. Aggregate health spending climbed to $1.6 trillion, or $5,440 per person (Exhibit 1). After overall health expenditures are adjusted for economywide inflation, constant-dollar growth rose 7.1 percent per capita in 2002, compared with 4.9 percent average annual growth over the past four decades (Exhibit 2).
Private sources accounted for more than half of the $132.3 billion growth in health spending in 2002, as private health insurance payments rose $54.0 billion and direct payments from consumers rose $12.0 billion. Private health insurance alone contributed the largest share of the increase in 2002, 41 percent, while out-of-pocket spending contributed 9 percent, and other private funding accounted for 4 percent.1 In the public sector, growth in the Medicaid program accounted for 20 percent of the overall increase as more people became eligible for enrollment. Other public funding accounted for 26 percent of overall health spending growth.
From the health care provider perspective, spending growth also reflected a return to higher growth in hospital care. Hospitals' contribution to aggregate spending has rebounded, as hospital spending growth rose from an average annual rate of 3.7 percent between...