Tracking health care costs: growth accelerates again in 2001

For the first time in more than a decade, health care spending per capita rose at a double-digit rate in 2001, growing 10 percent. Spending on hospital services (both inpatient and outpatient) surged by 12 percent in 2001, reflecting increases in both hospital payment rates and use of hospital services. Hospital spending was the key driver of overall cost growth, accounting for more than half of the total increase. Prescription drug spending growth declined for the second straight year and was overtaken by spending on outpatient hospital services as the fastest-growing component of total spending. Driven by these cost trends and other factors, premiums for employment-based health insurance increased 12.7 percent in 2002--the largest increase since 1990. But taking account of the sizable amount of "benefit buy-down" in 2002, the true increase in the cost of health insurance for employers and employees was about 15 percent. Early evidence from 2002 suggests that health care cost trends are now beginning to slow, possibly setting the stage for more moderate premium growth in the future.