WASHINGTON – Health care spending in Maryland reached an all-time high in 2004, with increased hospital usage contributing to almost half of the $1.9 billion spending growth, according to a report released by a state commission.
The Maryland Health Care Commission said the state’s health care spending hit $28.8 billion in 2004, fueled by rising hospital costs and admissions.
“We need more beds, we’re full,” said Mary Patton, director of public relations at Howard County General Hospital. Population growth and an expanded emergency department are creating the hospital’s crowds, she said.
Medicare patients are also a significant factor in statewide admissions increases, the report said.
Patton agreed, saying many Howard County residents were “Baby Boomers, hitting the 60-plus mark.”
“People over 65 consume more health care,” she said.
Average hospital charges per case were allowed to rise by up to 8 percent in 2004, by the independent state agency that oversees hospital costs. In 2003, the Health Services Cost Review Commission allowed rates to rise just 4 percent.
Maryland is the only state in which hospital rates are set by an independent state agency.
“We’re trying to allow hospitals to generate profitability so they can recapitalize, rebuild and replace,” said Robert Murray, executive director of the Health Services Cost Review Commission. The commission timed its rate increase to coincide with low interest rates on bonds to allow hospitals the opportunity to capitalize on investment opportunities.
Maryland hospital rate increases are higher than the national average of about 7 percent, but the commission is considering lowering them to about 5 percent.
Maryland’s $1.9 billion, 7 percent increase in 2004 health care spending actually contributed to a trend of lower growth rates, the report found. In 2003, health care spending increased 8 percent, and in 2002 it increased 11 percent.
Prescription drugs also experienced a smaller increase in growth, costing Marylanders about $4 billion dollars in 2004, according to the report.
The decreased growth rate was attributed in the report to greater generic drug use and the over-the-counter availability of popular drugs like Prilosec and Claritin.
Overall, the report found that on average in 2004 Maryland residents paid almost $200 less than the national average, $5,374, for annual health care. Hospital services accounted for about one-third of the total spending.
The report compiled state, federal and private figures to give an accurate account of health care spending in 2004. It used data from private insurance companies, state employee health plans and Medicare and Medicaid.