New report notes slow growth in U.S. healthcare spending

WASHINGTON The Centers for Medicare and Medicaid Services reported the slowest growth in healthcare spending since the organization began tracking such expenditures in 1960.

Nominal health spending in the United States grew 4.4% in 2008 to $2.3 trillion, or $7,681 per person. The findings are included in a report by CMS’ Office of the Actuary, released Tuesday in the health policy journal Health Affairs.

Despite slower growth, however, healthcare spending continued to outpace overall nominal economic growth, which grew by 2.6% in 2008 as measured by the gross domestic product. CMS added that the spending accounted for 16.2% of the U.S. economy.

“This report contains some welcome news and yet another warning sign,” said Jonathan Blum, director of CMS’ Center for Medicare Management. “Healthcare spending as a percentage of GDP is rising at an unsustainable rate. It is clear that we need health insurance reform now.”

The economic downturn significantly impacted health spending as more Americans could not afford to spend their limited resources on health care and instead went without care. This led to slower growth in personal health care paid by private sources of funds, which increased only 2.8% in 2008. The recession also made it difficult for many Americans to afford private health insurance and coverage, leading to lower growth in private health insurance benefit spending which slowed to 3.9% in 2008.

Additionally, health spending was also impacted by the American Recovery and Reinvestment Act of 2009, which provided a temporary 27-month increase in federal medical assistance percentages used to determine the federal Medicaid payments to states. The legislation led to approximately $7 billion of Medicaid spending shifting from states to the federal government for the last quarter of 2008. Meanwhile, total healthcare spending by such public programs as Medicare and Medicaid grew 6.5% in 2008, the same rate as in 2007.

Click here to read the complete report.