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To: Bobby Yellin who wrote (18908)	9/15/1998 2:03:00 PM
From: Alex	Respond to of 116764

Health care expected to cost Americans $2.1 trillion by 2007 Copyright c 1998 Nando.net Copyright c 1998 Scripps Howard WASHINGTON (September 15, 1998 09:13 a.m. EDT nandotimes.com) -- Between boom economic times and an aging population, government forecasters expect health care inflation over the next decade to double to $2.1 trillion by 2007. "The slowdown in growth of health costs of the past several years is coming to an end, and we expect a higher sustained level of growth averaging about 6.5 percent a year for the next five years," said Sheila Smith, an economist for the federal Health Care Financing Administration and lead author of the study, published in the journal Health Affairs. Still, that's well below the 11- to 13-percent-a-year health cost inflation seen in the 1970s and 1980s, said Richard Foster, chief actuary for the agency, which runs Medicare and Medicaid. The study also indicated that Medicare and Medicaid spending would grow at only about half the pace of private spending over the next five years, largely because of the reforms imposed by Congress last year. In 1996, private insurance plans and consumers paid $552 billion for health care, while Medicare and Medicaid and other government programs paid for $483 billion worth of care. The report projects that in 2007 private spending will exceed $1.15 trillion, while government programs will spend $987 billion. But the forecasters said their projections assume that the less generous fees to doctors, hospitals, HMOs and home health care will stay in force for the next decade. Many health care providers have launched intense lobbying efforts this year to convince Congress to restore some of the cuts. Smith said the decline in health spending of the early 1990s, driven mainly by the widespread enrollment of Americans into managed care plans, is shifting partly because managed care has already proven so popular: 85 percent of people in employer-sponsored health plans are in some type of managed care. "It's our feeling that growth in enrollment can't keep that pace, and that the most dramatic effects on spending come when people first enroll," Smith said. At the same time, the strong economy and a consumer backlash against managed care are boosting demand for medical services and limiting the ability of HMOs to decide whether care should be covered or who should provide treatment. The researchers also point to a tight labor market resulting in more people being insured, along with higher wages being paid to health care workers. However, not all health analysts agree that spending is going to again soar. Jon Gabel, director for survey research at the consulting firm KMPG Peat Marwick, said health care wages have risen below wages in all industries, and that inflation in the private sector has yet to materialize. "This is a different health care system than we started out with in 1990, and I don't think the positive influence of managed care is going to be a one-time thing," said Gabel. A report he prepared with Paul Ginsburg, president of Health System Change, published in the same journal, finds that employer-based health insurance premiums grew by only 3.3. percent this year. Their study also indicates that both out-of-pocket spending and employee contributions to coverage have been declining over the past two or three years. While some managed care companies have had trouble growing and pricing their services to make a profit, and could boost premiums to catch up next year, Gabel said he and Ginsburg believe cost growth will be held down by continued improvement in management techniques and continued competition for managed care contracts among providers. "Health plan managers have not employed all the bitter medicine that they could," Gabel said. By LEE BOWMAN, Scripps Howard News Service