Largely as a result of the economic recession, US healthcare spending increased just 4% in 2009, which is the lowest rate of growth since 1960, according to the latest annual National Health Expenditure Accounts (NHEA).
Total US health spending reached $2.5 trillion for the year, or $8,086 per person, and the 4% growth rate follows the 4.7% rate of rise reported for 2008, which was the second slowest rate of growth since the NHEA – which give the official estimates of total annual health care spending in the US – were first published in 1960.
Despite the slowdown, US health care spending growth continued to outpace overall economic growth, which declined 1.7% in 2009 as measured by nominal Gross Domestic Product (GDP). And health spending as a share of GDP continued to climb, reaching 17.6% in 2009, up 1.0 percentage point from 2008, which is the largest one-year increase in the history of the NHEA, the figures show.
Retail prescription drug spending grew 5.3% in 2009 to $249.9 billion after showing 3.1% growth in 2008, this advance being “driven by faster growth in both prices and utilization,” the Accounts add. Prescription drugs accounted for 10% of health spending overall during the year.
The recession, which began in December 2007 and ended in June 2009, affected health spending as many consumers reduced their use of goods and services, partially as a result of lost employer-based private health insurance coverage and lower household income. This led to a deceleration in private health insurance spending, which increased only 1.3% in 2009 compared to 3.5% in 2008, due primarily to a 3.2% drop in enrollment. At the same time, as more people became eligible for and enrolled in Medicaid – the federal/state health programme for people on low incomes – growth in the programme’s spending accelerated to 9.0% in 2009 following 4.9% growth in 2008.
With approximately $34 billion in enhanced federal aid for states provided by the American Recovery and Reinvestment Act of 2009, federal Medicaid spending increased 22.0% and its share of total Medicaid spending reached 66%, from a 59% share in 2008, the Accounts show. In contrast, state Medicaid spending declined 9.8%, which is the largest drop in the programme’s history. The economic downturn also affected consumer out-of-pocket spending on health care, which slowed to 0.4% growth in 2009.
Hospital spending increased 5.1% to $759.1 billion during the year, from growth of 5.2% in 2008. Spending on physician and clinical services was up 4.0% to $505.9 billion, representing a deceleration from the 5.2% growth reported the year.
Total health care spending by health insurance payers, which includes Medicare (the federal programme which covers most people aged 65 and over and some disabled people) and Medicaid, increased 5.1%, slightly down from 2008’s growth of 5.3%, while private health insurance premiums increased 1.3%, down significantly on the 3.5% advance reported for the year before and the slowest rate of growth in the history of the NHEA. Out-of-pocket spending grew 0.4%, compared to 2008’s rise of 3.1%, the report adds.
• The NHEA is published annually by the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary. It measures annual health spending by the types of goods and services delivered (hospital care, physician services, retail prescription drugs, etc), by the programmes and payers that pay for that care (private health insurance, Medicare, Medicaid, etc), and by the sponsors who are ultimately responsible for financing that care (private businesses, households and governments).
