U.S. Health Care Spending Rose 7.8% in ’93 : Economy: Shalala calls the increase the smallest since 1986 but says it still exceeds the inflation rate.

Health spending by Americans increased 7.8% last year, the smallest rise since 1986, Secretary of Health and Human Services Donna E. Shalala announced Tuesday.

Americans spent $884.2 billion on health services, or about $3,299 per person, she said.

Only a few years ago, the annual increases in health spending nationwide were in the double digits. Whether last year’s slowdown means that the nation has gotten control of what a previous Secretary called “the health care inflation monster” is still unclear.

“No one knows whether the slowdown in cost growth can be sustained,” said John Holahan, a health care policy analyst at the Urban Institute. “There is certainly evidence of near-term success, but whether it’s permanent is a big unknown.”

Shalala said that although the growth in health spending went from 8.6% in 1992 to 7.8% last year, the 1993 rise is still much higher than the national inflation rate of 2.7% and greater than the growth of the gross domestic product.

However, Mike Bromberg, executive director of the Federation of American Health Systems, which helped defeat the Clinton Administration’s cost-control proposals for health spending, took a more optimistic view. The low growth figure, he said, demonstrates that “the market is working better and can work. And if we remove some barriers, the market can work even better.”

“The problem of rising health costs is not over,” he said, “but the latest figures are clearly a reflection of managed care trends,” in which insurers and providers of medical care carefully monitor care and payments.

Private expenditures are slowing for two reasons, Holahan said. First, each year sees fewer people with health insurance coverage, so they and the insurers are spending less. Second, the private sector has been “successful in controlling costs,” he said, through managed-care methods such as “negotiating contracts with doctors and hospitals” to provide services at specified discounts according to fee schedules.

Shalala, however, said: “Slow growth in health spending appears to result more from very low inflation in the rest of the economy than from any permanent changes in the health sector.”

In 1986, the growth rate of health outlays slowed to 7.2%, only to rise to near double that a few years later. The United States now spends 13.9% of its GDP on health, by far the highest for any developed nation.

The report Shalala released Tuesday shows that the federal government, which paid 31.7% of the nation’s health care bill, “was the fastest-growing payer of health care.”

Medicare-Medicaid administrator Bruce C. Vladeck said, “Medicare outlays per enrollee grew more rapidly than private insurance in 1992 and 1993,” reversing the pattern of a decade.