US health care spending growth slowed for the second straight year in 2004, with a rise of 7.9% compared with 8.2% in 2003 and 9.1% in 2002, says the Office of the Actuary at the US Centers for Medicare and Medicaid Services’ annual report.
US health care spending totaled $1.9 trillion in 2004, or $6,280 per person, while the share of US Gross Domestic Product spent on health care grew 0.1 percentage point to 16.0%, a smaller increase than in recent years, it says.
Prescription drugs accounted for 11% of the growth in national health care expenditures In 2004, a smaller share of the increase than in recent years, while drug spending’s 8.2% rate of growth for the year was also slower in absolute terms than in previous years – 10.2% in 14.3% in 2000-2. Moreover, while drugs accounted for 23% of personal health spending growth during 1997-2000, by 2002-4 they represented just 14%.
US federal, state and local government spending on health care rose 8.2% in 2004, says the study. Public expenditure continues to be dominated by Medicare ($309 billion in 2004), where growth rebounded in 2004 partly due to the Medicare Prescription Drug, Improvement and Modernization Act of 2003. Medicaid spending reached $291 billion in 2004, to account for 15% of total national health care expenditures but with growth decelerating from 8.8% in 2003 to 7.9%. This, says the report, reflects continued cost-containment efforts by US states which contributed to a marked slowdown in spending growth for prescription drugs.
Factors contributing to the slowing trend in drug spending were: rapid growth in the use of generics through tiered benefit plans; increased use of over-the-counter anti-ulcerants and antihistamines; a shift towards mail-order dispensing; and reduced consumption of certain drugs on safety concerns. In contrast to the overall trend, growth in out-of-pocket spending on pharmaceuticals outpaced private health insurance spending growth for drugs in 2003 and 2004, says the CMS.