WASHINGTON – A state report due out this week is expected to show that Maryland experienced a double-digit increase in healthcare spending in fiscal 2001, a larger increase than previous years and slightly more than the national increase over the same period.
Barbara McLean, the executive director for the Maryland Health Care Commission, said the state increase is part of a three-year trend, but she would not discuss specific numbers until the report is released.
She said one reason for the higher spending is an increase in the utilization of hospital services, which can be attributed in part to an aging population and increased technology.
“There are newer, better types of services but they come at a cost,” McLean said.
Nationally, health spending grew 8.7 percent in 22001, the fastest growth in a decade and an increase about four times larger than average, according to a report released last week by the National Health Statistics Group, a federal agency.
The national increase is attributed to a combination of looser managed- care restrictions and an aging population, according to the report, which was released by the government in conjunction with Health Affairs magazine.
The increase in services could be seen in the increased spending on Medicaid, which grew about 10 percent, the largest increase since 1993, according to the national report. The growth was attributed to enrollment increases because of lowered eligibility requirements and expanded state programs.
Enrollment increases also helped drive up Medicaid spending in Maryland, along with overall inflation in health care costs, said Debbie Chang, the deputy secretary for healthcare financing at the Department of Health and Mental Hygiene.
Chang would not discuss the rate of increase, saying only that Medicaid spending grew by an average of 8.8 percent a year in Maryland from 1998-2002. She also would not discuss specific cuts or financial remedies to reduce spending until the state’s budget is released later this week.
Hospital spending grew 8.3 percent nationally in 2001, the largest increase in the last decade. Maryland hospital spending grew 3.9 percent, trailing the national increase as it has for the last few years, said Nancy Fiedler, a spokeswoman for the Maryland Hospital Association.
Fiedler said greater use of hospital services was the major reason for the increase in spending: Hospitals saw a 4.5 percent increase in the number of total of visits in 2001, and a 6 percent increase in emergency room visits.
Hospital visits have steadily increased in Maryland since 1999, Fiedler said, which she attributed to more autonomy among managed care users, better technology for the elderly and the poor lifestyle habits of many individuals.
“The real driver of the increase in hospital spending is that the number of people being admitted is growing by leaps and bounds,” she said.
Hospitals also hired more employees and paid them more, Fiedler said.
Despite that, she said, the state still has a shortage in many professional positions since most new employees are non-professional staffers. Among registered nurses alone there is a 15.6 percent vacancy rate, and about 42 other professional positions in Maryland have vacancy rates of at least 10 percent.
“To a large extent, hospital personnel are working harder to fill that void,” she said.
Fielder also pointed to rising costs for blood products and prescription drugs. Increases in prescription drugs accounted for the largest rate of increase in national spending.
While costs are up, patients in Maryland may not have to pay the full tab out of their pockets, because of the state’s rate-setting system, said Fiedler. Under that system, patients pay the same price for every procedure no matter what insurance carrier they have, although the prices for different procedures can vary by hospital.
Michael Preston, the executive director of MedChi, the Maryland State Medical Society, agreed that the health problems of the state’s aging population are driving most of the increases in costs.
But rising costs are not always bad things, when the alternative is death, he said.