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Health Expenses Held in Check, Rise Only 4.4%

MANAGED CARE February 1998. © MediMedia USA
News and Commentary

Health Expenses Held in Check, Rise Only 4.4%

MANAGED CARE February 1998. ©1998 Stezzi Communications

Evidence of managed care's success in containing costs: The Health Care Financing Administration reports health care expenditures, including private- and public-sector costs, rose only 4.4 percent in 1996--the smallest increase since statistics were first kept in 1960.

Annual cost increases have declined for six consecutive years since hitting 11 percent in 1990. In 1996, most spending --including that for physician, dental and other professional services and nursing home care --rose more modestly than in previous years. Prescription drug costs bucked the trend, rising faster than in 1995.

Similarly, a separate, major barometer of health costs, the annual Mercer/Foster Higgins survey, reported that bulging managed care enrollment contributed to a mere 0.2 percent increase in health costs for individuals covered by employer-sponsored health care.

But wait to pop those champagne corks. The good feeling could be short-lived, if analysts' predictions about higher costs of employer-sponsored health care are on the mark. Already, a Towers Perrin employer survey indicates health plan costs are up 4 percent this year.

"Most of our survey respondents expect even faster cost growth in 1999," says William J. Falk, a principal in Towers Perrin's Chicago office.

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