|January 09, 2012||
Slow Growth in Health Spending and Use of Health Care Goods and Services Continued in 2010, Federal Analysts Say
Health spending grew 3.9 percent in 2010, rising to $2.6 trillion
Bethesda, MD -- An extraordinary slowing of the growth in use of health care goods and services contributed to a second year of slow health spending growth in 2010, federal analysts reported in the January issue of Health Affairs. Persistently high unemployment, a substantial loss of private health insurance coverage, lower median household income, and the burden of increased cost sharing led people to forgo care or seek less expensive treatment options.
As a result, growth in national health spending remained low in 2010, following a similar and historically low rate of growth in 2009, according to analysts at the Centers for Medicare and Medicaid Services (CMS). Health spending grew 3.9 percent, only 0.1 percentage point faster than in 2009. Total health spending for 2010 reached $2.6 trillion, or $8,402 per person.
The rates of health spending growth in 2009 and 2010 marked the two slowest rates in the fifty-one-year history of the National Health Expenditure Accounts. "Even though the recession officially ended in 2009, its impact on the health sector appears to have continued into 2010," according to the article. "[The recession's impact] was a little more dramatic in 2010 because of a large decline in personal health care spending," says CMS economist Anne Martin, the article's lead author. "Medical goods and services are generally viewed as necessities, but the recession led consumers to be a lot more cautious about utilizing them."
Slower growth in spending for hospital services, physician and clinical services, and retail prescription drugs reflected slower growth in the use of these goods and services in 2010. Other contributors to overall low growth included slow growth in private health insurance and out-of-pocket spending, and slower growth in Medicare and Medicaid spending.
The CMS analysts' examination of spending on health care goods and services (such as hospitals, physicians, and retail prescription drugs) and the payers and programs that pay for them (such as private insurance, Medicare, and Medicaid) is part of the federal government's annual snapshot of US health spending trends based on the most current data available.
Federal Share of Health Spending Increased
About 45 percent of the nation's health bill was financed by federal and state and local governments in 2010, up from 41 percent in 2007. The federal government's share increased substantially in the last three years, while the share financed by state and local governments declined. The federal share of health care spending rose to 29 percent in 2010 ($742.7 billion), up from 23 percent in 2007. This was partly because of increasing Medicaid enrollment and enhanced federal matching rates mandated under the American Recovery and Reinvestment Act of 2009. In contrast, state and local governments' share decreased--from 18 percent in 2007 to 16 percent in 2010 ($421.1 billion).
Private Businesses Account for Smaller Share
Private businesses spent $534.5 billion on health care in 2010, or 21 percent of the nation's total health care bill. Their share has gradually decreased since 2001, when it was 25 percent. Employer contributions to private health insurance premiums and payroll tax¬–based employer contributions to the Medicare Hospital Insurance (Part A) Trust Fund saw much slower average annual growth between 2008 and 2010 than between 2000 and 2007 because of job losses due to the recession.
Households spent $725.5 billion on health in 2010; this amount accounted for 28 percent of national health spending, a historic low. After negligible growth in 2009, household spending grew 2.8 percent in 2010. Individuals' payroll tax contributions, self-employment contributions, and voluntary premiums paid to the Medicare Hospital Insurance Trust Fund increased 3.7 percent in 2010, following a decline of 3.5 percent in 2009. Consumer out-of-pocket payments, which grew just 1.8 percent in 2010, financed about two-fifths of all household spending on health care. Approximately one-third of household spending represented employee contributions to private health insurance premiums, which grew faster in 2010 (2.7 percent) after slow growth in 2009 (1.5 percent).
Although consumer out-of-pocket spending growth accelerated to 1.8 percent in 2010 from 0.2 percent in 2009, it was still slower than an average of 4.8 percent for 2000 through 2008. Faster growth in 2010 partially reflects higher cost-sharing requirements for some employees; consumers' switching to plans with lower premiums and higher deductibles or copayments, or both; and the continued loss of health insurance coverage.
Health Sector Spending Highlights:
|About Health Affairs|
Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print, with additional Web First papers published periodically and health policy briefs published twice monthly at www.healthaffairs.org. Read daily perspectives on Health Affairs Blog. Download weekly Narrative Matters podcasts on iTunes.