creases averaging 18.3 percent, with some proposed increases reaching as high as 60 percent.

In 1999, Health Affairs reported health insurance premiums increased 6.5% in 1999, faster than the period between 1993 and 1998, which averaged 5.0% annual growth. In that same year, health insurance premiums totaled $401.2 billion spent on health, while $355.3 billion was spent on benefits. The article predicted that premiums would continue to increase 9.3% in 2000, and 10.5% in 2001. During this period, it was believed that premium growth would surpass benefit growth.4

Also noted in the article, hospitals are requesting double-digit rate increase from insurers due to growing labor and utility costs in 2000 and 2001. Insurers are, in turn, passing additional costs from hospitals and other providers to employers in the form of increased premiums averaging 18%.

Spending on prescription drugs rose 16.2% in 2000.5 The fastest-growing categories of drugs in terms of number of prescriptions written were antihistamines (18.4% increase), cholesterol-lowering drugs (18.1%) and antidepressants (11.3%). Factors influencing health care costs include:

  • Aging population

  • Diminished competition (mergers of providers and insurers)

  • Increased medical inflation

  • Increased prescription drug costs

  • Strong demand for medical services

  • Growth in technology including information technology investments

The top disease categories based on cost or utilization indicators include: Cancer, Ischemic heart disease, Congestive Heart Failure, Injury, Complications of Medical and Surgical care, Complications of Pregnancy, Psychiatric Conditions, and Asthma (Table 1).

A survey of 20 licensed HMO plans that published research in the public domain and had a specific infrastructure to support research, had 1996 revenue of $92 million and employed 1,273 staff.6 The selected plans covered more than 29 million members. Research conducted by these entities included health services, epidemiology, health economics, and clinical trials. The plan or parent organization and NIH were the largest source of funds (24% and 22%, respectively).


Heffler, et al.


Express Scripts. Express Scripts 2000 drug trend report. St. Louis. MO: June, 2001


Neslon AF, Quiter ES, Solberg LI. The state of Research within Managed Care Plans 1997 Survey. Health Affairs 17(1): 128–138.

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