Health Care Spending Summary

According to an article by Jessica Zigmond at Modern, and posted January 9, 2012, Health care spending growth remained slow in 2010, and the rate of spending had the lowest rate of increase in 51 years.

Health spending growth stayed slow in 2010: CMS

By Jessica Zigmond

U.S. healthcare spending grew 3.9% in 2010, reaching a total level of $2.6 trillion and following the slower-growth trend seen in 2009, according to the annual report on national health expenditures published in the journal Health Affairs.

The rate of spending in 2010 increased only 0.1 percentage point faster than in 2009 (3.8%), a year that had the lowest rate of increase in the 51-year history of the annual report, according to economics analysts from the CMS.

For hospitals, growth in spending slowed to 4.9% in 2010 from 6.4% in 2009, according to the findings. “In 2010, consumers continued to postpone medical care, as demonstrated by a decline in median inpatient admissions and slowing growth in emergency department visits, outpatient visits and outpatients surgeries, the article noted.

Growth in spending for physician and clinical services grew at a historically low rate of 2.5% in 2010, the article said. “Along with the continued effects of declining private health insurance coverage, the slowdown was influenced by an increase in cost sharing among employer-based health insurance plans, with more expenses being passed on to the consumer,” the article noted.

The CMS’ Office of the Actuary prepares the report each year.

Meanwhile, as healthcare spending remained slower, growth in the overall U.S. economy as reflected by gross domestic product grew at a rate of 4.2%, which kept the health spending share of GDP unchanged at 17.9%. According to the data, the federal government spent about $742.7 billion in 2010 and accounted for about 29% of the nation’s healthcare spending that year. The federal government’s share reflected an increase of 6 percentage points from a level of 23% in 2007, with the increase primarily was due to more federal matching funds for state Medicaid programs under the American Recovery and Reinvestment Act, which expired in 2011.

Spending for personal healthcare goods and services also grew at a slower rate—to 3.7% in 2010 compared with 4.9% in 2009.

“And the services contributing most to the slowdown in personal healthcare spending were hospital services, prescription drugs, and physician and clinical services,” Anne Martin, an economist in the CMS’ Office of the Actuary, said at a news conference in Washington on Monday. “And the slower growth was primarily driven by slowdown in the use and intensity of services,” she said, adding, “This was a result of persistently high unemployment, a continued loss of private health insurance coverage, fewer resources available to pay for out-of-pocket costs, and insurance plans increasing cost-sharing, which shifted more costs onto consumers.”

Analysts said that while the most prominent provisions of 2010’s Patient Protection and Affordable Care Act will not be implemented until 2014, there were some measures that were effective in 2010, including changes to Medicare provider rates (effective Oct. 1, 2009), the Medicare prescription drug rebate for beneficiaries in the “doughnut hole,” and small-business tax credits for offering employer-sponsored insurance (effective Jan. 1, 2010). Researchers concluded that the projected net effect of the law’s provisions on health spending growth in 2010 was about 0.2.