Medicare costs restrained

Thursday, January 31, 2002

DME costs rise 4.5%, slower than Medicare's 5.6%
BALTIMORE - Overall healthcare spending jumped almost 7% last year, outpacing last year's 5.7% growth clip as the cost of health care in the U.S. grew to $1.3 trillion.

The 6.9% growth rate exceeded growth in the Medicare program, which grew 5.6% to $224 million in 2000. Medicare accounted for 38% of public spending on health care and 17% of overall health spending. Increases in Medicare spending were attributed largely to changes in provider payments, including those enacted in the Balanced Budget Refinement Act of 1999.

Federal and state spending for Medicaid, a program of health care for low-income families, totaled nearly $202 billion in 2000, an increase of 8.3% from 1999. Federal and state spending for the State Children's Health Insurance Program was $2.8 billion in 2000, a 55% increase from the 1999 level.

Spending for freestanding home health services increased by 0.3% in 2000, after five years of declining growth and actual declines in 1998 and 1999.

Spending for prescription drugs once again led in the pace of growth in 2000, although at a slower rate than recent years. Drug spending increased by 17.3% to a total of $121.8 billion in 2000, compared to 19.2% increase to a total of $103.9 billion in 1999.

Hospital spending rose to $412 billion in 2000, an increase of 5.1% over 1999. Nursing home expenditures, which had been trending downward since 1995, rose by 3.3% in 2000.

Though Medicare spending grew less dramatically than health care in the private sectors, lawmakers are still looking for deeper cuts.

"I don't think they have all the reins [on Medicare] they want, but they're beginning to understand what needs focus and what needs to be left alone for a couple of years," said Dave Williams, Invacare's director of government relations. "That's the good news for our industry." HME