What makes medical costs go up?
By Jane Galt
lots of things, says the Wall Street Journal (subscription required):
"Hospitals remain the 800-pound gorilla of health-care costs, particularly the fast-growing segment of out-patient services. While admissions and actual use of hospital services have risen less than 1% since 2003, prices climbed at an annualized 7.7% in the first six months of 2004, nearly as much as the 8% increase in 2003.
One factor in the higher hospital prices is labor: Nursing shortages helped drive up hospital wages by 4.5% in the first half. Dr. Ginsburg said earlier cuts in profit margins for Medicare patients also may have prompted hospitals to shift more of the cost onto private payers.
Though prescription drugs have been a lightning rod for rising health-care costs, actual drug spending continues to moderate. In the first half of the year, it climbed an annualized 8.8%, slowing from the 9.6% rate that prescription-drug spending rose in the second half of 2003. Much of the slowdown appears tied to prices, which increased a modest 3.1%. The relatively slow drug inflation reflects the increased use of cheaper, generic drugs. The growing popularity of tiered drug copayments, which force consumers to spend more if they opt for expensive brand-name drugs, also may have pressured drug makers to hold down prices, the study's authors said."
What does the bolded passage tell us? That more than half the increase in prescription drug spending came, not from greedy drug companies gouging patients, but from greedy drug companies providing more drugs for a rapidly ageing population to take.
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