Where health expenditures have been, and where they are likely to go

The Health Care Financing Administration confirms that the big upturn in medical inflation almost everyone expects hasn’t yet hit. But the rate of spending in the private sector has increased three years in a row, as health plans try to shore up margins.

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Increasing health plan premiums are contributing to the rise in public-sector spending. According to Milliman & Robertson, the actuarial and consulting firm, premiums rose nearly 8 percent in 1998 — a figure that takes on added significance considering that the average annual premium increase since 1994, including this year’s jump, has been, by M&R’s tally, only 1 percent.

Looking to 1999, Watson Wyatt Worldwide, the management consulting firm, sees even steeper premium increases for non-HMO health plans. Part of the rises can be traced to a predicted 15-percent-or-higher increase in prescription-drug expenses.

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