| ALEX CHADWICK, host:
I’m Alex Chadwick in Los Angeles. This is DAY TO DAY.
A report out today from a health-care policy research group says that health-care spending slowed last year for the second year in a row. But that conclusion from the Center for Studying Health System Change–that doesn’t mean that health care is suddenly cheaper. In fact, the report also shows hospitals are charging more for their services. Joining us from the “Marketplace” newsroom in Los Angeles is Tess Vigeland.
Tess, what’s the bottom line here? Are we paying less for health care?
TESS VIGELAND reporting:
No, we’re certainly not, Alex. What this study says is that the explosion in spending on health care has slowed a bit. In other words, we’re still spending more and more and more as each year goes by, but apparently not as much more. Last year, health-care spending grew 7.4 percent; in 2002, it had jumped 9.5 percent. So it’s kind of mixed good news. Health-care costs still very high. In fact, as you mentioned, hospital prices are way up; 8 percent last year. But for various reasons, we and our employers aren’t paying as much into the system.
CHADWICK: The rate of increase has slowed. Why is that?
VIGELAND: For one, some employers and their health plans are simply saying no to these high costs. You may remember a couple of weeks ago, CalPERS, the California Public Employees Retirement System, they announced that they were essentially kicking out 38 hospitals from their HMO network for being too expensive. A lot of employers have also shifted more of the cost burden to employees, so when you have to pay more out of your pocket, you might think twice about the treatments that you’re seeking.
I spoke with Paul Ginsberg, who heads up the organization that did the study, and he cited yet another reason.
Mr. PAUL GINSBERG (Center for Studying Health System Change): One of the major factors is that when we had extremely high rates of spending increase a year or two ago, that I believe was driven by the loosening of managed care in response to backlash. Now that loose managed care is the norm and has been with us for a while, that’s why the rate is returning to a more normal rate of increase.
VIGELAND: So it’s not so much why the rate of increase is down now, but what drove it up in the first place.
CHADWICK: But has something changed in the system to lessen the rate of increase of health-care costs?
VIGELAND: Yeah. Ginsberg pointed out that around 2001, a lot of managed-care programs stopped requiring people to get authorizations for things like admitting a patient to a hospital or getting a major test like an MRI. And he said, again, that that’s in response to a backlash from consumers. So the rates of use of all of those services spiked because you didn’t have to get authorized. The rate of people using those services has stayed up, but now they’re not growing dramatically. Now that’s another potential factor in why health-care spending is still on the upswing, but not by the margins of a couple of years ago.
And today in the “Marketplace” newsroom, we’re looking at the impact of political stability in Saudi Arabia on prices at the pump.
CHADWICK: Thank you, Tess.
Tess Vigeland of public radio’s daily business show, “Marketplace.” She joins us regularly at this time for discussions about money and business. And “Marketplace” is produced by Minnesota Public Radio.
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