Tracking Health Care Costs: Spending Growth Stabilizes at High Rate in 2004

Originally published by the Center for Studying Health System Change (HSC) as Data Bulletin No. 29, June 2005.

Health Care Spending Growth Levels Off at a High Rate in 2004

The recent slowdown in health care spending growth leveled off in 2004, with costs per privately insured American rising 8.2 percent, virtually unchanged from the previous year's rate. While this represented a significant decline from the peak growth of 11.3 percent in 2001, health spending growth continued to outpace overall economic growth by 2.6 percentage points, despite a robust 5.6 percent increase in per capita gross domestic product.

Hospital inpatient spending grew 6.2 percent, while outpatient spending increased at a faster 11.3 percent clip, reflecting the ongoing migration of services from inpatient to outpatient settings. Physician care spending rose 6.4 percent, and prescription drug spending growth continued its deceleration, increasing 7.2 percent compared with a peak of 18.1 percent in 1999. If health spending growth continued to significantly outpace worker income growth, health insurance would become unaffordable for increasing numbers of Americans, deepening coverage erosion and expanding the uninsured population.

Sources and Further Reading

Strunk, Bradley C., Paul B. Ginsburg, and John P. Cookson, "Tracking Health Care Costs: Spending Growth Stabilizes at High Rate in 2004," Data Bulletin No. 29, Center for Studying Health System Change (June 2005).