Report: Growth in US health spending remained slow in 2010

Issue: February 2012

Health care spending in the United States experienced historically low rates of growth in 2009 and 2010, according to the annual report of national health expenditures published in Health Affairs.

Analysts at the Centers for Medicare & Medicaid Services (CMS) reported that the increase in spending for 2009 represents the lowest rate of increase in the 51-year history of the national health expenditures (NHE) report. The low rate of growth, according to a CMS news release, reflects lower use in health care than in previous years. The report noted that U.S. health care spending increased 3.9% in 2010 — 0.1% faster than in 2009. The report noted that growth in the U.S. economy as reflected in gross domestic product (GDP) rebounded, while the health spending share of the overall economy was unchanged at 17.9%.

“We have worked hard since the passage of the Affordable Care Act in 2010 to lower health care cost growth,” Marilyn Tavenner, acting CMS administrator, stated in the release. “We believe that the tools in health reform will help keep health care cost growth low while improving the value of care for consumers.”

Key findings from the report include:

Household health care spending equaled $725.5 billion in 2010, representing 28% of total health spending, slightly less than its 29% share in 2007. Growth in total private health insurance premiums slowed in 2010 to 2.4% from 2.6% in 2009, continuing a slowdown that began in 2003. For the first time in 7 years, the growth in premiums exceeded the growth in insurer spending on health care benefits — with the net cost of insurance increasing by 8.4% or $11.3 billion in 2010. Out-of-pocket spending by consumers increased 1.8% in 2010, compared with 0.2% growth in 2009.
Retail prescription drug spending (10% of total health care spending) increased 1.2% to $259.1 billion in 2010, a slowdown from 5.1% growth in 2009 and the slowest rate of growth for prescription drug spending recorded in the NHE.
Medicaid spending increased 7.2% in 2010, slowing from growth of 8.9% in 2009.
Hospital spending, which accounted for approximately 30% of total health care spending, increased 4.9% to $814 billion in 2010, compared with growth of 6.4% in 2009.
Growth in private health insurance spending for hospital services, which in 2010 accounted for 35% of all hospital care, slowed considerably in 2010.
Physician and clinical services spending, which accounted for 20% of total health care spending, increased 2.5% to reach $515.5 billion in 2010, slowing from 3.3% growth in 2009.

Reference:

Martin AB, Lassman D, Washington B, et al. Growth in US health spending remained slow in 2010: Health share of gross domestic product was unchanged from 2009. Health Aff. 2012. doi: 10.1377/hlthaff.2011.1135.