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Published: February, 2005; Vol 1, Num 9

 

Health Care Costs Continue
To Plague US Economy, LIUNA Funds

In the latest summation of health spending in the U.S., a study in the January/February journal Health Affairs indicates that, in 2003, for the first time ever, more than 15 percent of the nation’s gross domestic product (GNP) went to health care.

That is 20 percent more than the next highest industrial nations, Switzerland and Germany.

The 2003 increase was only 7.7 percent, after a 9.3 percent increase in 2002. Still, health spending in 2003 averaged $5,670 per person, up $353 from 2002. Hospital care accounted for about a third of all expenditures.

The 2003 percent increase was greater than the growth in the U.S. economy as a whole. That means health spending rose faster than federal revenues and crowded spending on other priorities.

The data indicate that, for 2003, state governments finessed the increase by restricting growth in Medicaid programs. These programs are funded from federal taxes, but administered by the states. In 2003, 34 states tightened eligibility requirements or benefits for Medicaid (health coverage for low income families). Many states froze Medicaid payments to hospitals, and the rate of increase in such payments slowed by almost six percentage points from 2002. Medicaid and Medicare (health coverage for senior citizens that is administered by the federal government) both cut spending on nursing home care as well.

Further state cuts in Medicaid are expected in 2005. For instance, on January 10, Tennessee’s Democratic governor announced that he was cutting 323,000 “working poor” people from TennCare and reducing benefits for 400,000 others. According to a report in the Washington Post, other states, including Florida and New York, are eyeing specific cost-cutting measures.

Another factor that limited the rate of increase in health spending in 2003 was a slower increase in prescription drug sales. Retail sales were $179.2 billion in 2003, just 10.7 percent more than the previous year. Yet, prescription drugs remain the fastest growing sector of health spending and account for 11 percent of all health care dollars spent.

The slip in prescription drug spending was attributed to several factors including greater use of generic drugs and the conversion of Claritin, a popular allergy drug, to over-the-counter sales. Other factors included a drop in the rate of growth of dispensed prescriptions, wider use of tiered prescription co-pay plans and a broader shift to Canadian and other non-U.S. pharmacies.

“These trends indicate that the nation’s health care cost crisis is still escalating,” says LHSFNA Health Promotion Director Mary Jane MacArthur. “Unfortunately, there is no end in sight.” Renewing her call to LIUNA health and welfare funds, she adds, “We have to continue to educate our members and their families on the appropriate use of health care services and the true cost of medical care – encourage wellness, ensure regular check-ups, avoid unnecessary hospital emergency room visits, promote generic drug use and explore every angle to reduce overhead and costs.”

“Though the rate of increase in spending in 2003 was lower than 2002,” says LIUNA General Secretary-Treasurer and LHSFNA Labor Co-Chairman Armand E. Sabitoni, “it was still a substantial increase, and no one anticipates any real drop in overall health spending anytime in the near future. The American health care system is in serious trouble.”

Sabitoni points out that too many people have no health care coverage and, therefore, generally postpone seeking attention for their health problems. They do not discover their illnesses until they have seriously progressed. This increases the cost of their treatments, cost that is then passed along to insured patients – such as LIUNA members – by the hospitals (all hospitals are required to treat the uninsured in order to received Title 18 and 19 federal funding).

Data indicate that 82 percent of union construction workers have union- or employer-provided health insurance compared to only 46 percent of non-union construction workers. “Amazingly,” says Sabitoni, “our health and welfare funds are paying a significant portion of the health care costs of workers in the non-union sector whose employers refuse to provide coverage! Until this system is reformed, our best hope is to keep our members well and avoid unnecessary trips to the hospital.”