U.S. Spending on Health Care Slowed in 2008

TUESDAY, Jan. 5 (HealthDay News) -- Despite the recession, U.S. health-care spending in 2008 reached $2.3 trillion -- or $7,681 per person -- and grew faster than the national economy, a new study has found.

However, the amount spent in 2008 on health care, an increase of 4.4%, represented the slowest rate of growth in the nearly 50 years since the federal government began tracking the trend. Even so, health-care spending accounted for 16.2% of the gross domestic product, compared with 15.9% in 2007, according to the annual report from the U.S. Centers for Medicare & Medicaid Services.

"Health-care spending is usually somewhat insulated from the immediate impact of a downturn in the economy, but this recession has exerted considerable influence on the health-care sector," the report's co-author, Micah Hartman, an agency statistician, said in a news release from the journal Health Affairs. The study is in the journal's January issue.

Hartman and colleagues analyzed public and private spending on hospitals, physicians, pharmaceuticals and long-term care facilities. Health spending growth slowed in nearly all health-care goods and services, particularly for hospital care.

However, the share of federal revenue that funded health care increased to almost 36%, compared with 28% in 2007. The increase was the result of the American Recovery and Reinvestment Act of 2009, the stimulus bill that temporarily shifted $7 billion in additional federal funds to Medicaid to help cash-strapped states, the report said.

The researchers also found that increased hospital admissions contributed to a 7.7% rise in Medicare spending on hospital care in 2008, compared with a 4.7% increase in 2007.

Medicare spending increased 8.6% to $469.2 billion in 2008, compared with a 7.1% rise in 2007. Along with a significant increase in spending on hospital care, there were more seniors enrolled in private Medicare Advantage plans. Enrollment in these plans increased 13.6% in 2008, and Medicare Advantage spending rose 21.3% to $108.2 billion in 2008, the study found.

Medicare spending for fee-for-service prescription drugs increased 8.8% in 2008, compared with a 13.9% rise in 2007, the report noted.

Among its other findings:

  • Enrollment in Medicaid grew 2.6% in 2008 (compared with 0.7% in 2007), attributed to rising unemployment and loss of private health insurance. The federal portion of Medicaid spending increased 8.4%, the highest rate of growth since 2003. State spending decreased by 0.1%, the first decline in the program's history. The difference was due "almost entirely" to the increased federal spending under the stimulus bill.
  • Out-of-pocket spending for health-care services increased 2.8% in 2008, compared with 6% in 2007. The 2008 increase was the lowest since the mid-1990s and could have been due to the large number of Americans who lost jobs and health insurance and had less disposable income.
  • Health insurance premiums rose 3.1% in 2008, the lowest rise since the 3.9% increase in 1967. The number of people with private health insurance decreased from 196.4 million in 2007 to 195.4 million in 2008.
  • Spending on hospital care rose 4.5% to $718.4 billion in 2008, the slowest increase since 1998. The rate of increase was 5.9% in 2007.
  • Spending for physician and clinical services increased 5% to $496.2 billion in 2008, the slowest rate of growth since 1996. The rate of growth was 5.8% in 2007.
  • Retail prescription drug spending increased 3.2% to $234.1 billion in 2008, continuing a slowing trend that began in 2000. Prescription drug prices increased 2.5% in 2008, compared with 1.4% in 2007.
  • Spending on nursing home care increased 4.6% to $138.4 billion in 2008, compared with a 5.8% increase in 2007.

-- Robert Preidt

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SOURCE: Health Affairs, news release, Jan. 5, 2010