Tracking health care costs: continued stability but at high rates in 2005.

Health care spending per privately insured person increased 7.4 percent in 2005, marking the third year that the cost trend hovered between 7 and 8 percent following double-digit trends in 2001 and 2002. Data for the first quarter of 2006 suggest continued stability. The trend for 2005 reflected increased growth in spending for hospital and physician care, offsetting a sharp drop in spending growth for prescription drugs. Hospital utilization trends accelerated, while price trends decelerated in 2005. In contrast to stable spending trends in 2005, premium trends continued to decline in 2006, likely reflecting the lagged effects of earlier years' slowing in cost trends and perhaps signaling a turn in the insurance underwriting cycle.

Tracking health care costs: declining growth trend pauses in 2004.

Health care spending increased 8.2 percent in 2004. This was virtually unchanged from 2003, which suggests that health care cost trends have stabilized. Hospital spending grew 10.1 percent in 2004, also virtually unchanged from 2003, reflecting a small increase in the hospital utilization trend and a small decline in hospital price inflation. Meanwhile, growth in prescription drug spending continued to fall as a result of slower growth in prices. Growth in health insurance premiums slowed again in 2005, likely reflecting earlier years' slowing in cost trends and signaling that a turn in the insurance underwriting cycle might be under way.