WASHINGTON, Jan. 10 (UPI) -- Overall U.S. expenditures for healthcare slowed to their lowest rate of growth since 2000 last year, but analysts warned that the nation's medical spending is still outstripping its long-term ability to pay.
According to a federal report released Tuesday, $1.88 trillion was spent on healthcare for Americans in 2004, up 7.9 percent from the year before. That was slightly less than an 8.2-percent growth rate in 2003.
Government analysts said that they were somewhat encouraged by the slight slowdown in spending increases that have threatened to hinder the economy and have caused significant alarm among U.S. employers.
Officials attributed the slowdown largely to a lower growth rate for prescription-drug spending, which dipped below double digits for the first time in a decade. An increasing reliance on lower-cost generics and the move of a handful of popular drugs to non-prescription status in 2004 both helped slow spending, they said.
Still, health spending outgrew the economy by nearly 1 percent last year, despite an unusually high 7 percent overall growth rate. Healthcare now takes up 16 percent of the U.S. gross domestic product, a share that has more than doubled since 1970.
"The growth has slowed but it's still faster than economic growth," said Stephen Heffler, an analyst with the federal Centers for Medicare and Medicaid Services, which generated Tuesday's report.
Costs continue to rise for businesses and consumers, both of whom faced another year of rising health-insurance premiums last year. The decade-long trend is seen by most experts as a major driver behind the steadily rising numbers of Americans who lack health insurance as fewer workers and employers can afford coverage.
In addition to higher premiums, consumers paid an average of 5.5 percent more in out-of-pocket costs like premiums and co-payments in 2004.
Paul Ginsburg, president of the Center for Studying Health System Change, told United Press International that the ease in spending growth is still outpacing wages. "It still means that healthcare is becoming more unaffordable to more and more people, and that tempers the good news of a slowdown," he said.
American companies, which spent $448 billion on health coverage for workers and retirees last year, continue to face pressure from mounting costs. The trend has forced major companies, including General Motors, to scale back on benefit packages for employees.
Some workers who once enjoyed full health coverage are now being asked to shoulder some costs to ease burdens on employers. They include New York City Transit workers who agreed several weeks ago to give up guaranteed full health coverage as part of a labor deal with the city's Metropolitan Transit Authority.
Other employers have begun requiring workers to pay higher co-pays, deductibles or other costs for care. Tuesday's report showed that firms offering coverage cut their share of workers' insurance premiums by an average of 1.3 percent, shifting that cost to employees.
Ken Thorpe, a health policy analyst at Emory University, warned that U.S. health spending is likely to rise quickly over the next three decades as baby boomers retire and the nation's demographic landscape shifts toward the aged.
In addition, health-centered trends like high adult obesity rates will continue to drive higher and higher costs by contributing to expensive chronic diseases like diabetes and cardiovascular disease.
"These population issues are really the key driver," he said.
