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Growth is projected to slow in 2003 after six consecutive years of acceleration.
ABSTRACT: The rate of growth in national health expenditures is projected to fall to 7.8 percent in 2003 because of slower private and public spending growth. However, during the next ten years health spending growth is expected to outpace economic growth. As a result, the health share of gross domestic product (GDP) is projected to increase from 14.9 percent in 2002 to 18.4 percent in 2013. The recently passed Medicare drug benefit legislation (not included in these projections) is not anticipated to have a large impact on overall national health spending, but it can be expected to cause sizable shifts in payment sources.
HEALTH SPENDING in the United States is projected to grow 7.8 percent in 2003, a marked slowdown from the 9.3 percent growth experienced in 2002 (Exhibits 1, 2, and 3).1 A slowdown in overall health spending growth in 2003 would follow six consecutive years of accelerating growth; it reflects the convergence of several factors anticipated to slow spending growth in both the private and public sectors. For public spending, these factors include states' decisions to limit Medicaid spending in light of their fiscal problems and the expiration of some legislated additionalMedicare payments. For private spending, growth in health insurance spending per enrollee is projected to slow because of a modest deceleration in medical prices and use. Hospital spending growth, a major factor in the recent acceleration of national health spending, appears to have reached its peak in 2002, and prescription drug spending growth is projected to continue to decelerate in 2003.
These trends are supported by the most recent employment, hours, and earnings data from the Bureau of Labor Statistics (BLS), which show a modest slowdown in growth in health sector hourly wages and employment beginning in 2002 and continuing for 2003, implying slower medical price inflation and use.2 In fact, growth in personal health care spending slowed slightly in 2002 for everymajor type of service except hospital care. Despite the projected slowdown in 2003, health spending growth is still anticipated to outpace the rebound in overall economic growth by three percentage points. As a result, the health sector's share of gross domestic product (GDP) is projected to...