Tracking Health Care Costs: Spending Growth Remains Stable at High Rate in 2005

Originally published by the Center for Studying Health System Change (HSC), 2006.

Health Care Spending Growth Remains Stable at a High Rate in 2005

Health care spending growth per privately insured American remained stable at a high rate in 2005, continuing a pattern that had held for several years. While the rapid acceleration of the late 1990s and early 2000s had moderated, cost growth continued to significantly outpace growth in the overall economy and in workers' earnings, maintaining pressure on employers, insurers, and individuals.

Hospital spending continued to be driven primarily by price increases rather than increased utilization, reflecting the growing market leverage that hospital systems had accumulated through consolidation. Outpatient spending maintained its rapid growth as services continued migrating from inpatient to ambulatory settings. Prescription drug spending growth continued to decelerate, a trend attributed to the expiration of patents on major brand-name drugs, increased use of generic medications, and greater use of pharmacy benefit management tools. The findings reinforced that the health care cost problem was not a temporary spike but a structural challenge requiring systemic solutions.

Sources and Further Reading

Center for Studying Health System Change, "Tracking Health Care Costs: Spending Growth Remains Stable at High Rate in 2005" (2006).