Growth in U.S. Health Spending Remains Slow in 2010

U.S. health care spending experienced historically low rates of growth in 2009 and 2010, according to the annual report of national health expenditures (NHE). The low rate of growth means Americans got less health care than in previous years. The report notes that U.S. health care spending grew only 3.9 percent in 2010, reaching $2.6 trillion or $8,402 per person, just 0.1 percentage point faster than in 2009.

Should the Affordable Care Act (Obamacare) get credit for this slow growth?  Or is it that Americans, so many of them with lousy health insurance with high deductibles – or no health insurance – are afraid to go to the doctor? Nobody knows the answer to this question, but the slowing growth of health care expenditures is a good thing for government budgets and employer-based health insurance premiums.

Marilyn Tavenner, acting CMS administrator thinks the actions of the Obama administration should get some credit. “We have worked hard since the passage of the Affordable Care Act in 2010 to lower health care cost growth,” said  “We believe that the tools in health reform will help keep health care cost growth low while improving the value of care for consumers.”

Findings from the report include:

• Household health care spending equaled $725.5 billion in 2010 and represented 28 percent of total health spending, slightly lower than its 29 percent share in 2007.
• Growth in total private health insurance premiums slowed in 2010 to 2.4 percent from 2.6 percent in 2009, continuing a slowdown that began in 2003.

• Retail prescription drug spending (10 percent of total health care spending) grew only 1.2 percent to $259.1 billion in 2010, a substantial slowdown from 5.1-percent growth in 2009 and the slowest rate of growth for prescription drug spending recorded in the NHE.

• The federal government financed 29 percent of the nation’s health care spending in 2010, an increase of six percentage points from its share in 2007 of 23 percent, and reached $742.7 billion. Part of that increase came from enhanced Federal matching funds for State Medicaid programs under the American Recovery & Reinvestment Act which expired in 2011.  Medicare spending grew 5.0 percent in 2010, a deceleration from growth of 7.0 percent in 2009.

• Medicaid spending increased 7.2 percent in 2010, slowing from 8.9-percent growth in 2009.

• The state and local government share of total health spending declined from 18 percent in 2007 to 16 percent in 2010 and totaled $421.1 billion, in part due to the temporary assistance in the Recovery Act.

• Hospital spending, which accounted for roughly 30 percent of total health care spending, grew 4.9 percent to $814.0 billion in 2010, compared to growth of 6.4 percent in 2009.

• Private businesses financed $534.5 billion, or 21 percent of total health spending in 2010, down from a 23-percent share in 2007.

Information in this report can be accessed at the following web location:

http://www.cms.gov/NationalHealthExpendData/02_NationalHealthAccountsHistorical.asp#TopOfPage

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