Health Care Spending at Historical Low Rate but
Still Grows Faster that U.S. Economy
Health care spending as a percentage of GDP is
rising at an unsustainable rate
Jan. 5, 2010 Health spending in the U.S. grew 4.4
percent in 2008 the slowest growth rate since the Centers for Medicare
& Medicaid Services started officially tracking expenditures in 1960
but a rate still much higher that the economic growth rate for the
national economy as measured by the Gross Domestic Product (GDP), which
was just 2.6 percent. Health spending grew to $2.3 trillion or $7,681
per person.
The findings are included in a report by CMS
Office of the Actuary, released today in the health policy journal
Health Affairs.
This report contains some welcome news and yet
another warning sign, said Jonathan Blum, director of CMS Center for
Medicare Management.
Health care spending as a percentage of GDP is
rising at an unsustainable rate. It is clear that we need health
insurance reform now.
The 4.4 percent growth in 2008 was down from 6.0
percent in 2007, as spending slowed for nearly all health care goods and
services, particularly for hospitals.
However, health spending as a share of the nations
GDP continued to climb, reaching 16.2 percent in 2008, up 0.3 percentage
points from 2007. Larger increases in the health spending share of GDP
generally occur during or just after periods of economic recession.
The economic downturn significantly impacted health
spending as more Americans could not afford to spend their limited
resources on health care and instead went without care. This led to
slower growth in personal health care paid by private sources of funds,
which increased only 2.8 percent 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.
Health spending was also impacted by the American
Recovery and Reinvestment Act of 2009 (ARRA), which provided a temporary
27-month increase in Federal Medical Assistance Percentages (FMAP) used
to determine the federal Medicaid payments to states. The legislation
led to approximately $7 billion of Medicaid spending shifting from
states to the federal government for the last quarter of 2008.
Other statistics on the growth of health care
spending in the new report include:
● Hospital spending in 2008 grew 4.5 percent to
$718.4 billion, compared to 5.9 percent in 2007, the slowest rate of
increase since 1998.
● Physician and clinical services spending
increased 5.0 percent in 2008, a deceleration from 5.8 percent in 2007.
● Retail prescription drug spending growth also
decelerated to 3.2 percent in 2008 as per capita use of prescription
medications declined slightly, mainly due to impacts of the recession, a
low number of new product introductions, and safety and efficacy
concerns.
● Spending growth for both nursing home and home
health services decelerated in 2008. For nursing homes, spending grew
4.6 percent in 2008 compared to 5.8 percent in 2007.
● Total health care spending by public programs,
such as Medicare and Medicaid, grew 6.5 percent in 2008, the same rate
as in 2007.
● Health care spending by private sources of
funds grew only 2.6 percent in 2008 compared to 5.6 percent in 2007.
● Private health insurance premiums grew 3.1
percent in 2008, a deceleration from 4.4 percent in 2007.
Jan. 5, 2010 Health spending in the U.S. grew 4.4
percent in 2008 the slowest growth rate since the Centers for Medicare
& Medicaid Services started officially tracking expenditures in 1960
but a rate still much higher that the economic growth rate for the
national economy as measured by the Gross Domestic Product (GDP), which
was just 2.6 percent. Health spending grew to $2.3 trillion or $7,681
per person.
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