WASHINGTON – Health care spending grew in 2005 at the slowest pace in six years thanks in part to a greater reliance on generic drugs.
Health spending went up 6.9 percent in 2005, approaching $2 trillion. That represents about $1 out of every $6 spent in the U.S., compared with about $1 out of every $10 in the early 1980s.
The slower growth in 2005 is good news for consumers and taxpayers, but economists aren’t confident that the trend will last.
Richard Foster, the chief actuary for the Centers for Medicare and Medicaid Services, which complied the data, said there is a growing demand for expensive lifesaving equipment and procedures.
“We don’t see much that is going to change that for a long time to come,” Foster said.
Officials said prescription drugs played the most important factor in slowing health-care spending in 2005. The growth in spending on medicine was lower than overall spending on health care for the first time since the early ’90s.
In the past five years, insurers have sought to slow drug spending by giving customers an incentive to buy generics or low-cost brand name drugs. For example, they require customers to pay only a nominal fee for certain medicines, say $3.
However, for medicines they’d rather the customer not take, they’ll require the customer to pick up a much larger share of the drug’s costs, say 20 percent.
States also took steps to rein in costs. They pooled together to negotiate lower prices for the medicine they provide the poor and elderly in Medicaid. They also encouraged the use of generics. As a result, drug spending by states went from an 11.6 percent increase in 2004 to just 2.8 percent in 2005.
Officials also noted that spending on health care is concentrated. About 2 percent of U.S. consumers account for about a third of expenditures.
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