Chicago (Reuters) -- Although health care spending slowed for the first time in five years, health care costs are growing more than three times the rate of inflation. Results from a recent study also show that premiums charged by health insurers (and paid for by consumers and employers) climbed 15%, which is the biggest spike in over ten years. The data is derived from samples from the Milliman USA health cost index.

"Unless underlying health care costs trends slow significantly, health insurance premiums will continue to rise rapidly," states Paul Ginsburg, president of the Center for the Study of Health System Change, which looks at health market trends, and an author of the study.

The study looked at spending by employers and private health insurance companies on hospital costs, doctor's visit, and prescription drugs. Hospital, drug, and doctor costs are widely seen driving premium increases, yet insurers price premiums in anticipation or rises in the costs. This can cause discrepancies in growth rates. The report explains how hospitals continue to use the formidable negotiating leverage they regained over health plans in the late 1990's to demand large payment rate increases.

Findings

• Rises in hospital costs dominated the increase for the second year in a row. It accounted for 51% of the overall cost spiral.
  
• Spending on inpatient hospital care grew by 6.8%, and that on outpatient care by 14.6%. The report says that most of the rise is due to cost increases not volume.
  
• Spending on prescription drugs rose 13.2% last year, compared to 13.8% in 2001.
  
• Government figures also show that U.S. consumer prices overall rose by 2.4% in 2002.