Report Health Care Spending Growth Rate Slowest in Decades

Health care spending in the U.S. grew 4.4 percent in 2008 to $2.3 trillion, the slowest rate of growth in nearly 50 years, the Centers for Medicare and Medicaid Services reported.

Spending growth was down from 6 percent in 2007 as spending slowed for nearly all goods and services, according to the report, “Health Spending at a Historic Low in 2008,” published in the journal Health Affairs.

Hospital spending in 2008 grew 4.5 percent to $718.4 billion, compared with 5.9 percent in 2007, “the slowest rate of growth since 1998,” CMS statistician Micah Hartman, who co-authored the report, said at a briefing to discuss the findings. Nevertheless, 31 percent of the nation’s health care money went to hospital care in 2008, making up the largest percentage of spending, followed by other spending (25 percent) and physician and clinical services (21 percent).

The economic downturn significantly affected health care spending, resulting in more Americans going without care and making it more difficult for people to afford private insurance.

“Health care spending is usually somewhat insulated from the immediate impact of a downturn in the economy. But this recession has exerted considerable influence on the health care sector,” Hartman said.

Private insurance benefits and premiums in 2008 grew at their slowest rate since 1967, while public programs such as Medicare and Medicaid grew 6.5 percent, the same rate as in 2007. Retail prescription-drug spending slowed to 3.2 percent in 2008, reflecting a decline of per capita use of prescription medications.

Despite slower growth, health care spending continued to outpace overall economic growth, which was 2.6 percent in 2008 as measured by the gross domestic product.

Filed by Jennifer Lubell of Modern Healthcare, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Stay informed and connected. Get human resources news and HR features via Workforce Management‘s Twitter feed or RSS feeds for mobile devices and news readers.