Prescription meds changing health care spending

Newswise — The 1 percent of Americans who spend the most on medical care experienced a 4 percent drop in their share of the nation's overall health care spending from 1996 to 2003 from 28 percent to 24 percent, according to a new study by HHS’ Agency for Healthcare Research and Quality in Health Affairs.

In general, the concentration of health care spending in the United States has shifted partly because of rapid growth in prescription drug spending and slower growth in spending for hospital inpatient care. Between 1996 and 2003, inflation adjusted spending on prescription medicines increased by 125 percent, while spending for inpatient hospital care grew by only 11 percent.

As a result, spending for prescription medicine accounted for 20 percent of overall medical care expenditures in 2003, up from 12 percent in 1996. During the same period, the share of spending for inpatient hospital care dropped from 39 percent to 34 percent.

The patients in the top spending brackets tended to have chronic illnesses, such as heart disease and cancer, who often require costly hospital inpatient care. The declines were apparent for people of all ages and with both public and private insurance. Previous studies showed that their share of medical spending remained relatively stable for the three decades prior to 1996.

According to the authors, while encouraging patients to be sensitive to drug prices, such as through health plan tiered formularies or high deductibles, may increase the potential for cost savings, Medicare’s Part D drug benefit will probably increase prescription drug spending. However, the impact of Part D on the concentration of health care spending is not clear at this point