Health Care Costs Expected to Rise 38% over Next Five Years, Says State Agency

By Watkins, Robert | THE JOURNAL RECORD, July 21, 1988 | Go to article overview

Health Care Costs Expected to Rise 38% over Next Five Years, Says State Agency


Watkins, Robert, THE JOURNAL RECORD


How much health care inflation is in our future?

Even with inflation as measured by the consumer price index (CPI) at the lowest levels in more than 20 years, costs for medical care continue to rise at almost twice the rate. And the immediate future may see the rate of increase climbing higher and perhaps more sharply.

The Oklahoma Health Planning Commission anticipates a 38 percent increase in total health care expenditures over the next five years.

Data on which state estimates are based come from the federal Health Care Financing Administration (HCFA), an agency of the Department of Health and Human Services.

If the federal projections are correct, the state, after adjusting the national figures to fit Oklahoma's health profile, does indeed face a 38 percent increase between 1988 and the early 1990's, a planning division staffer confirms.

Admittedly, there are variables. Inflation, foreboding as ever, crowds the top of the list.

"If inflation takes off, all estimates will have to be revised," observes the planning commission's Jerry Prilliman. "That's a variable that really impacts."

How merciless it can be is seen in consumer price index reports issued by the U.S. Bureau of Labor Statistics. In 1986, for example, the index was a low 1.9. In the same year, however, its medical care component was 7.5 percent. That's the rate of increase.

Although health care costs are said to have moderated in Oklahoma during the past three years, experts still voice concern as they examine a range of potentially explosive issues.

- Acquired immunodeficiency syndrome (AIDS), which has reached epidemic proportions, certainly will claim a heavier share of health care dollars.

Officials at the state health department see the number of AIDS victims doubling within a few years. Treatment costs could reach or exceed $100,000 per case unless a dramatic turnabout occurs. Already, in some areas, costs have climbed to that level.

By mid-July, the state had reported 274 AIDS cases and 139 deaths. Figures aren't available on the number of human immunodeficiency virus (HIV) infections, a virus that ultimately leads to full blown AIDS, but health experts say there may be 20-50 HIV carriers for each AIDS patient.

- Medicare and Medicaid utilization is a more obvious inflationary component, along with hospitalization and home health care. Except in its role as an administrator of Medicaid, the state has little or no control over medical costs. Medicaid is a joint state and federal program for low income people. Medicare is wholly a federal program for the disabled and people 65 or older.

- Home health care, in the view of some health care economists, might possibly contribute to less hospitalization and perhaps lower nursing home costs at some point, but the commission's Prilliman says he has not yet seen data that would document any savings.

- "Age of the population is another variable," says Prilliman. "As the population gets older, that expanding group will have an impact on health care because it will require more health care services."

The state population over 65 already stands at 12.2 percent of the total and is rising. By 1990, according to estimates from the Oklahoma Department of Commerce, 12.7 percent of the state's people will be above the age of 65. Projections through 1995 suggest an additional 21 percent increase.

More to the point, 32 cents of every personal health care dollar spent in Oklahoma goes for the care of those 65 and older. The money is spent either by them or for them, the planners say.

In l985, the cost of nursing home care - reported at $462 million - was 10 percent of the state's total health care expenditures. An aging population obviously will have profound effects on future expenditures for long-term care. …

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Health Care Costs Expected to Rise 38% over Next Five Years, Says State Agency
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