In 2003, the pace of health spending growth slowed for the first time in seven years, according to the latest report from the Centers for Medicare & Medicaid Services Office of the Actuary, which shows that total health expenditure increased at just under 8% in the twelve-month period to $1.7 trillion dollars, versus 9% growth in 2002.

On a per capita basis, the report claims that health spending increased by $353 to $5,670 in 2003, accounting for over 15% of growth domestic product, outpacing growth in the overall economy by nearly 3 percentage points.

Key changes in funding for healthcare greatly influenced overall health spending in 2003. Total public spending growth slowed significantly from nearly 10% in 2002 to just under 7% in 2003, driven primarily by a slowdown in Medicaid spending growth, from 12.6% in 2002 to 6.9% in 2003. Although Medicaid funded 16% of aggregate health spending (or $267 billion), total spending slipped from in excess of 12% in 2002 to 7% in 2003.

Spending growth for prescription drugs decelerated significantly to 10.7%, down from just shy of 15% in 2002. Among factors the report says contributed to this slowdown were: a reduction in the growth of number of prescriptions dispensed, the conversion of a popular allergy drug to over-the-counter status, several drugs losing their patent protection, and the expanded use of tiered co-payment plans. As a result, growth in the number of prescriptions sold per person slowed to 1.7%, about half the 2002 growth of 3.5%.

“This is good news for the public and our health care system and is the result of changes designed to slow down the growth in spending,” said health and human services secretary, Tommy Thompson. ”But we have more to do before we can declare victory over rising health care costs.” CMS administrator, Mark McClellan, noted: “[We] have taken important steps in recent years to contain costs in our major health care programs while improving the quality of care that patients receive. And as we implement the new Medicare law, we intend to do even more in the year ahead.”