CMS study: Healthcare spending increases 14 percent in 2002

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The Centers for Medicare & Medicaid Services (CMS) today confirmed what many patients and providers probably already knew - healthcare costs are continuing to climb.

A new CMS report states that healthcare spending in the United States rose to $1.6 trillion in 2002, up from $1.4 trillion in 2001 and $1.3 trillion in 2000.

The growth rate of 9 percent for 2002 -- the latest year for which actual spending figures are available - compares with 8.5 percent in 2001. It also is the sixth consecutive year in which health spending grew at an accelerated rate. Health expenditures per person averaged $5,440 in 2002, a gain of $419 from $5,021 in 2001 and $4,670 in 2000.

The biggest contributor to the increase is prescription drugs, with a 15.3 percent hike in 2002. Total spending for prescription drugs in 2002 was $162.4 billion, compared with $140.8 billion in 2001.

Hospital spending increased by 9 percent in 2002 to $486.5 billion, marking the fourth year in a row of growth. Spending for physician services reached $340 billion in 2002, an increase of 8 percent over 2001.

Private payers funded more than half of national health expenditures in 2002, with private health insurance contributing $549.6 billion, 35 percent of the total. Out-of-pocket payments of $212.5 billion accounted for 14 percent of expenditures and continued to decline as a share of total spending.