Health care costs concern Americans most By JIM ABRAMS Associated Press Writer

Source: CMS, Office of the Actuary, National Health Statistics Group. Calendar Years Percent of GDP ActualProjected Between 2001 and 2011, health spending is projected to grow 2.5 percent per year faster than GDP, so that by 2011 it will constitute 17 percent of GDP. National Health Expenditures as a Share of Gross Domestic Product (GDP)

Health Care Problems Most Americans see health care and insurance costs as a more pressing problem than malpractice lawsuits, a survey says, although the Bush administration often cites litigation as a reason for high medical bills. The Kaiser Family Foundation, a nonprofit organization that studies health care issues, and the Harvard School of Public Health said reducing malpractice jury awards ranked 11th on a list of 12 items people thought should be health care priorities for the president and Congress. Named most often, by 63% of respondents, was lowering the cost of health care and insurance, followed closely by making Medicare more financially sound and increasing the number of Americans with insurance.

Drug Expenditures The survey found that 73% favor changing the law to allow Americans to buy prescription drugs imported from Canada. That change is strongly opposed by the pharmaceutical industry, and the administration says it is too costly to do safely. Four out of five surveyed also want the government to negotiate with drug companies for lower prices, a practice expressly banned by the Medicare law enacted in Among those 65 and older, 46% viewed that new law unfavorably, against 29% with a favorable impression. Four-fifths of those seniors said the law was too complicated for people to understand.

Expenditures for Health Services, by All Payers Percent Share Calendar Years Source: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. In recent years, the hospital share of total spending has decreased while the prescription drug share has increased.

Factors Accounting for Growth in Personal Health Care 1 Expenditures Per Capita Selected Calendar Year Periods Average Annual Percent Change 2 1 Personal health care spending comprises therapeutic goods or services rendered to treat or prevent a specific disease or condition in a specific person. 2 Utilization includes quantity, quality, and mix of services. As a residual, this factor also includes any errors in measuring prices or total spending. Note: Medical prices are calculated using the personal health care chain-type index constructed from the producer price index for hospital care, nursing home input price index for nursing home care, and consumer price indexes specific to each of the remaining personal health care components. Source: CMS, Office of the Actuary, National Health Statistics Group. The most important factor accounting for the slowdown in personal health care expenditure growth after 1993 was the decline in medical price growth.

The Economics? What leads to changes in health care costs (expenditures)? Thought Process: Expenditures = Price x Quantity Suppose that Expenditures = $900 billion If Price  by 3.4%, and Quantity  by 2.0% THEN: New Exp = (1.034 x Price) x (1.02 x Quantity) New Exp = (1.034 x 1.02) x Old Expenditures New Exp = (1.055) x Old Expenditures