U.S. Health Spending Grew at Near-Record Low in 2010, CMS Finds

Health spending grew by 3.9% in 2010, a near-historic low, as U.S. residents opted to forgo hospital and physician visits and delayed prescription drug purchases, according to a new CMS analysis published in the journal Health Affairs, the New York Times reports (Pear, New York Times, 1/9).

Report Details

CMS attributed the low rate to the economic downturn. The report said, "Persistently high unemployment, continued loss of private health insurance coverage, and increased cost sharing led some people to forgo care or seek less costly alternatives than they otherwise would have used" (Radnofsky, Wall Street Journal, 1/10).

It added, "Although medical goods are generally viewed as necessities, the latest recession has had a dramatic effect on their utilization" (AP/Washington Post, 1/10).

The report noted that in 2010, health care spending aligned with overall economic growth and barely surpassed the record low of 3.8% in 2009. CMS found that health expenditures in 2010 totaled $2.6 trillion, or $8,402 per person.

Spending growth for private insurance decreased to 2.4% because fewer people enrolled in plans or moved to plans with less-costly premiums, according to the report. Meanwhile, out-of-pocket spending increased by 1.8% (Wall Street Journal, 1/10). According to CMS, premiums increased by 3.7% in 2010, down from a 5.7% increase in 2009 (Pecquet, "Healthwatch," The Hill, 1/9).

Federal, state and local governments laid out 45% of health expenditures in 2010, the report found (Wall Street Journal, 1/10). According to CMS, federal spending on health care increased by 40% from 2007 to 2010, in part because of an increase in Medicaid enrollment and a temporary increase in the federal Medicaid contribution under the 2009 economic stimulus package (New York Times, 1/9).

Obama Administration Hails Low Reform Law Cost

The report also found that the federal health reform law contributed just 0.1 percentage points to the overall increase in health care spending, which the Obama administration said is evidence that the overhaul is not making health care more costly.

In a blog post, White House Deputy Chief of Staff Nancy-Ann DeParle wrote, "The report ... found no spike in health care costs due to health reform." She noted that certain provisions in the law -- such as anti-fraud measures, care coordination and disease prevention -- are "helping to keep health care cost growth down" ("Healthwatch," The Hill, 1/9).