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Fam Pract Manag. 1998 Feb;5(2):14.

Health care spending sets two records

A new report from HCFA shows that health care spending in the United States has reached an all-time high: over $1 trillion in 1996, the most recent year for which data is available. Remarkably, though, health care's growth rate that year was just 4.4 percent (1.9 percent, adjusted for inflation), the slowest growth rate in almost 40 years.

The report's authors cite managed care as one factor contributing to the record-low growth rate. Critics, however, insist that managed care's savings were only temporary, resulting in part when competition between insurers in the early stages of managed care held premiums low. HCFA's report notes that premiums appear to be rising again, with consumers footing more of the bill; employers shifted an additional $3.6 billion in health care costs to their employees in 1996.

The report also notes that health care consumed 13.6 percent of gross domestic product in 1996, as it has since 1993. Even with this plateau, the U.S. health system remains the most costly in the world.

HCFA's National Health Accounts Team conducted the study, published in Health Affairs, November/December 1997.

Medicare crackdown nets $7.6 billion

The government's efforts to fight Medicare fraud and abuse resulted in savings of $7.6 billion in fiscal year 1997 and the exclusion of more than 2,700 providers from Medicare and other government health programs, according to a report from the Department of Health and Human Services' Office of Inspector General (OIG).

Of the savings, $1.2 billion came from intensified civil and criminal investigations of fraud and abuse made possible under the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The remaining savings came from the OIG's regular audit and inspection processes, which received additional funding under HIPAA.

A total of 2,719 providers were excluded from federal health programs in FY 1997, the report says, almost twice as many as in FY 1996. In addition, 215 individuals or organizations were convicted of fraud-related crimes against federal health programs, and 1,255 civil settlements were reached.

The report also notes that the OIG's first-ever comprehensive audit of Medicare claims revealed that an estimated $23.2 billion, or about 14 percent of all fee-for-service Medicare payments in FY 1996, was lost to fraud, abuse, waste and errors.

The full report is available from the OIG web site (

Quote. Endquote.

“I don't think anyone knows where we are going. This is a wacky period in health care.”

Health economist Marilyn Moon, of the Urban Institute in Washington, cautiously avoiding predictions about the future of health care in the United States.


Freudenheim M. Progress on health costs, but nagging woes persist. The New York Times. Jan. 5,1998.

Physicians organize in Northwest

Over 200 physicians employed by Medalia Healthcare, based in Seattle, have formed the Northwest Physicians' Alliance. This is the largest group of salaried physicians to organize a union last year and the first group of physicians to organize a union in the Northwest. In late December the group filed with the National Labor Relations Board for representation by the United Salaried Physicians and Dentists, an affiliate of the Service Employees International Union.

The physicians say their goals include protecting the physician-patient relationship, establishing a strong physician voice at Medalia and building a constructive relationship with administration. Medalia is the largest network of primary care clinics in the state, with more than 40 locations.


Copyright © 1998 by the American Academy of Family Physicians.
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