Spending on Health Care Slows in U.S

Jan. 5, 2010 -- Spending on health care in the U.S. grew only 4.4% in 2008,
the slowest rate in nearly a half century, reflecting the nation's sluggish
economy, federal analysts report.
Still, overall health spending, which reached $2.3 trillion in 2008, or
$7,681 per person, increased faster than the overall economy, which grew at an
annual rate of 2.6% as measured by gross domestic product (GDP), according to a
report by the Centers for Medicare and Medicaid Services (CMS).
The report appears today in the health policy journal Health
Affairs.
"This report contains some welcome news and yet another warning sign," says
Jonathan Blum, director of CMS' Center for Medicare Management. "Health care
spending as a percentage of GDP is rising at an unsustainable rate."
The 4.4% growth rate in health spending was down from 6% in 2007, the report
says, noting that spending slowed for most health care goods and services,
particularly for hospitals. But health spending as a share of the nation's GDP
reached 16.2% in 2008, up from 15.9% in 2007, the report says.
Generally, larger increases in health spending as a share of GDP occur
during or just after periods of economic recession.
The recession significantly affected spending on health care by Americans,
who the analysts say could not afford to spend their limited resources during
such a severe downturn on health, and thus went without.
The CMS report says the recession resulted in slower growth in personal
health care paid by private sources, which increased a mere 2.8% in 2008.
"The recession also made it difficult for many Americans to afford private
health insurance coverage, leading to lower growth in private health insurance
benefit spending, which slowed to 3.9 percent in 2008," CMS says in a news
release.
In addition, the analysts say, the American Recovery and Reinvestment Act of
2009 led to about a $7 billion shift of Medicaid payments from states to the
federal government for the last three months of 2008.
The report also says that:

Hospital spending grew 4.5% to $718.4 billion in 2008, down from 5.9%
growth in 2007 and the slowest rate since 1998.
Retail prescription drug spending growth slowed to 3.2% in 2008 as use of
prescription drugs declined slightly, mainly due to the impact of the
recession. Other factors included a low number of new product introductions
last year.
Total health care spending by public programs, such as Medicare and
Medicaid, grew 6.5% in 2008, the same as in 2007.
Medicare spending grew 8.6% to $469.2 billion in 2008. That compared to a
2007 growth rate of 7.7%.
Private health insurance premiums grew 3.1% in 2008, down from 4.4% growth
in 2007.
Spending for physician and clinical services reached $496.2 billion, up 5%,
the slowest growth rate since 1996.
Spending on nursing-home care hit $138.4 billion in 2008, a 4.6% increase
over 2007's 5.8% rise.
Out-of-pocket spending growth for health care services rose only 2.8% in
2008, compared to 6% the previous year. The report says the slower growth may
be due to increased unemployment, which has caused millions to lose health
insurance and put a dent in disposable income.





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