The Rising Cost of Health Care.

• Position: Statestats

Rising health care costs and a slowing economy have cost control back on legislative and corporate agendas. Health care spending per privately insured person has increased for the third straight year.

The 7.2 percent rise in 2000 was the largest since 1990. Acceleration is spurred by the continued high cost of pharmaceuticals, and an increase in costs for hospital services.

The retreat of managed care may also contribute to escalating costs. Enrollment in HMOs, the most tightly managed method of health insurance, declined between 2000 and 2001, falling from 29 percent to 23 percent of employees, according to a recent report by the Kaiser Family Foundation and the Health Research and Educational Trust. In addition to enrollment decline, policy changes emphasizing consumer choice in health care providers and better availability of services may have diluted managed care's ability to control costs.

Employers--the backbone of America's health insurance system-are wrestling with escalating premiums and a lagging economy. Monthly premiums for employer-sponsored health insurance rose 11 percent this year...