For most of the baby boomer generation, retirement and old age don’t look very far away any more, a fact that suggests health care costs will continue to rise in the future. However, as a nation, our health care expenditures are actually growing more slowly, in defiance of demographic trends. Robert Pear of the New York Times reported January 9 that 2005 saw the slowest increase in health care costs in six years. The main reason cited was a sharp drop in growth of prescription drug expenditures – from an average yearly 15.4 percent in the period 1994-2004 to just 2.8 percent in 2005.
Nevertheless, experts and officials say this trend doesn’t necessarily mean that the federal administration has brought health care costs under control, or even that medical costs have become more affordable. Personal income still grew more slowly than medical bills. But one significant pattern, it seems, is that a larger proportion of medical bills cover prescription drugs, which span the population, than actual hospitalization costs, which tend to be concentrated in a select group.
We think this is good news. While it’s true that prescription drugs are expensive, at least in diabetes, proper use of drugs can prevent the much greater expense of complications later in the disease that require hospitalization and expensive procedures, to say nothing of reduced quality of life. We hear a lot about how the growing burden of diabetes is affecting the health care system, so the statistics reported here are interesting. We don't actually know how much of the 2005 costs were spent on diabetes. The last time we got good data on spending for diabetes was $92 billion in direct costs in 2003 and if growth were 3% per year since then, total direct costs would have reached $101 billion by end of 2006. If growth were as high as 10% per year, total direct spending would have reached $122 billion per year. Food for thought - think of how far investment in education by diabetes educators could go if just a tenth of even 3% yearly growth were diverted to preventative education! That would be an investment of more than $300 million in 2007 for better education - how about it!
Below we’ve broken down some of the statistics that were listed in the article. Bear in mind these are 2005 figures:
- Health care expenditures were 16 percent of GDP, or national income.
- In terms of personal income, though, households spent six percent on health care.
- Each person spent on average $6,659 on health care, but in reality five percent of all Americans spent nearly half of the nation’s total.
- Total health care expenditures grew 6.9 percent.
- Spending on prescription drugs represent 10 percent of total health care expenditures, but grew only 2.8 percent.
- Spending on hospital care rose by 7.9 percent.
- Spending on home care grew 11 percent.
- Spending for doctors rose by 7 percent.