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Study: Health Care Spending Grows Faster Than Economy, Wages

By CQ Staff

October 3, 2006 -- Health care spending per privately insured American rose by 7.4 percent in 2005, the same rate of increase as the previous two years, according to a Center for Studying Health System Change (HSC) study released Tuesday.

Higher spending on hospital inpatient services, physician care, and other services helped fuel the growth, while prescription drug spending grew at a slower rate for the sixth year in a row and hospital outpatient care spending growth slowed slightly, the study found.

Health spending growth continued to outpace overall economic growth in 2005, despite a robust 5.4 percent increase in the U.S. economy as measured by per capita gross domestic product, the study found.

After peaking at 10.4 percent in 2001, health care spending growth slowed to 7.8 percent in 2003, followed by a 7.5 percent increase in 2004. Spending data for the first quarter of 2006 suggest growth at a similar rate.

"Health care spending continues to grow at a much faster rate than workers' income, making health insurance less affordable to more and more people, especially low to moderate wage workers and their employers," HSC President Paul B. Ginsburg said in a news release.

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