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sysadmin October 1st, 2001 11:31

Higher hospital bills predicted
Reprinted from

Consumers May See Higher Hospital Bills Wires
Thursday, Sept. 27, 2001

WASHINGTON -- Consumers may soon find themselves paying higher prices for care at certain hospitals as employers try to find new ways to cut their health care costs, researcher Paul Ginsburg, said today at a briefing sponsored by the Center for Studying Health System Change (HSC).
"We expect employers to do the same with hospital services as they are now doing with prescriptions, where going to expensive [hospitals] will cost consumers more," said Ginsburg, president of HSC and a co-author of a report on health care costs released on Wednesday. "Consumers want choice, but going forward I'm afraid they'll have to pay more for it."

Just like a "tiered" prescription drug benefit, where employees are charged more money if they opt to get a name-brand drug rather than a generic, insurers such as the Tufts Health Plan in suburban Boston are talking about charging patients $250 more if they have a procedure performed at a teaching hospital rather than a community hospital, he said. "We'll see more movement on this than we will on increasing choices of health plans."

The report's authors found that overall health care costs for privately-insured patients increased by 7.2% last year, the highest such increase in a decade. And, unlike the past few years when rising health care costs were largely a result of increases in prescription prices, last year's increase was due to higher hospital costs. "Inpatient and outpatient spending accounted for 47% of the cost increase, almost double the percentage in 1999," Ginsburg said.

Of the two types of hospital costs, outpatient spending grew the most, increasing by 11.2%, compared with a 2.8% increase in inpatient costs. One reason hospital costs are rising faster than usual is that hospitals' labor costs have gone way up, probably because of the shortage of nurses and other health care professionals, he continued. At hospitals, "the increases in average hourly wages are in excess of wage trends in the general economy."

As higher health care costs have forced health insurance premiums to rise over the last few years, employers have been absorbing most of the increase because they didn't want to lose workers during a tight labor market, Ginsburg said. But now that the economy is in a downturn and more workers are looking for jobs, employers are more likely to pass premium increases on to employees.

One reason for that is that employers don't have many options left to try when it comes to reducing their health care costs, said Kate Sullivan, director of health policy for the U.S. Chamber of Commerce. "They've tried managed care, they've tried purchasing care in a more cost-effective manner, they've tried doing purchasing based on outcomes. The reality is there's not a lot to be squeezed out of the system through different purchasing strategies."

Although hospital costs were the prime movers behind last year's health care cost increases, other health care costs continued to go up as well, Ginsburg said. Prescription drug costs grew by a whopping 14.5%, while the cost of physician services rose 4.8%, according to the report.

Copyright 2001 by United Press International. All rights reserved.

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