Health Care Spending Rose by Record Level in 2008, CMS Says
U.S. health care spending accounted for 17.3% of the nation's gross domestic product in 2009, an increase of 1.1 percentage points over 2008 and the largest one-year increase in health care spending since federal auditors began tracking the data in 1960, according to a CMS report published on Thursday in the journal Health Affairs, the Washington Post reports (Brown, Washington Post, 2/4).
The report estimated that despite an overall contraction of the U.S. economy, health care spending increased by 5.7% in 2009 to reach $2.5 trillion. U.S. health care spending grew by 4.4% in 2008 -- the slowest rate of growth since 1960 -- and by 6% in 2007.
Increased unemployment attributed to the recession -- and the resulting loss of health care benefits -- caused health care spending to increase through increased Medicaid spending and subsidies to help cover COBRA benefits for newly unemployed U.S. residents.
In addition, U.S. spending on H1N1 influenza patients contributed to the higher spending (Young, The Hill, 2/3).
According to the report, health spending by government programs -- particularly Medicare and Medicaid -- accounted for $1.2 trillion of the overall spending, while employer-based health insurance and private spending covered the remaining $1.3 trillion (Alonso-Zaldivar, AP/Atlanta Journal-Constitution, 2/4).
Government spending on health care grew by 8.7% in 2009, compared with a 3% growth rate for private spending by employers, health insurers and individuals (Washington Post, 2/4).
The report also estimated that:
- Spending on government health programs would account for 50.4% of national health spending by 2011, exceeding the 50% mark that federal officials previously predicted would not be reached until 2016;
- Rising unemployment during the economic recession and a drop in the number of people with private insurance coverage in 2010 would prompt Medicaid enrollments to increase by 5.6% and spending to increase by 8.9%;
- By 2019, total health spending would reach $4.5 trillion, 52.6% of which would be by government programs;
- By 2020, about $1 out of every $5 spent in the U.S. would go toward health care;
- The public share of health spending would increase more quickly in 2011, as the first baby boomers become eligible for Medicare (Landers, Wall Street Journal, 2/4); and
- Between 2009 and 2019, health spending will increase at an average rate of 6.1% annually, compared with an expected GDP growth of 4.4%, which would result in health spending making up 19.3% of GDP in 2019 (The Hill, 2/3).
Spending To Slow in 2010, Report Finds
The report estimated that health care spending growth will slow to 3.9%, below the expected growth rate of 4% for the economy, The Hill reports. However, the estimate assumes that Congress will not act to prevent a scheduled 21.3% reduction to Medicare physician reimbursement rates.
According to The Hill, if Congress prevents those cuts -- which is likely -- health care spending would grow by 4.7% (The Hill, 2/3).
According to the Post, it is possible that some portions of health care reform legislation currently being considered in Congress could slow the growth rate of health care spending (Washington Post, 2/4).However, the report did not consider what effect health reform legislation could have on health care spending (The Hill, 2/3). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.