CMS boasts historic low growth rate in healthcare spending

Monday, January 9, 2012

BALTIMORE – U.S. healthcare spending grew only 3.9% in 2010, reaching $2.6 trillion or $8,402 per person, according to CMS’s annual report of national health expenditures (NHE) published in the January issue of the journal Health Affairs.

That’s a rate of growth only 0.1% faster than in 2009, the agency reported.

“The increase in spending…represents the lowest rate of increase in the entire 51 year history of the NHE,” according to a CMS press release. “The low rate of growth, the data show, reflects lower utilization in health care than in previous years.”

The health-spending share of the overall economy, buoyed by not only slow growth in health care spending but also a 4.2% rebound in the U.S. economy as reflected in gross domestic product (GDP), was unchanged at 17.9%. In the past, this share has increased, rising over time from 5.2% in 1960.

Spending for durable medical equipment increased 7.3% in 2010 to 37.7 billion, after increasing 0.8% in 2009.

Spending growth for freestanding home healthcare services increased 6.2% in 2010 to $70.2 billion, following growth of 7.5% in 2009.

Medicare spending grew 5% in 2010 to $524.6 billion, a decrease from 7% in 2009. Spending for fee-for-service Medicare grew 5% in 2010, an increase from 4.5% in 2009. Medicare Advantage spending increased 4.7% in 2010, a steep decline from 15.6% in 2009.

Total Medicaid spending grew 7.2% in 2010 to $401.4 billion, a decrease from 8.9% in 2009, driven by slower growth in enrollment. Federal Medicaid expenditures increased 8.9%, while state Medicaid expenditures grew 3.9%. This difference was due to approximately $41 billion in enhanced federal aid to states.

Out-of-pocket spending grew 1.8% in 2010 compared to 0.2% in 2009. Faster growth partially reflects: high cost-sharing requirements for some employers; consumers switching plans with lower premiums and deductibles and high deductibles and/or co-payments; and continued loss of health insurance coverage.

To read more from the report, click here.



I spent two hours talking to a cardiologist a few nights ago at a football game party. He told me how cardiologist practices were shutting down and more cardiologists were just going to work for hospitals because Medicare was paying for fewer diagnostic tests and this was affecting the business model of a cardiology practice. And while the knee jerk reaction will be to say "good" or to say that doctors run too many tests you need to ask yourself one simple question. If you are very sick or possibly at risk of dying, do you want your doctor thinking about reimbursements and business considerations or do you want him thinking about the medical necessity of running a particular test that might save your life?<br />
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Also, this is how doctor rationing will occur. Cardiology becomes a less profitable vocation so more guys will retire early and fewer people will enter this specialization. In a few years there will be quite a few less cardiologists actively practicing medicine. Then access to treatment becomes a concern. Then the politicians get involved because they never miss a chance to pander and play on people&#39;s fears, greed and jealousy. Then the next thing you know whether or not your heart condition is treated will be more of a political decision than a medical one.<br />
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I&#39;ve also heard this same basic story from oncologists too. I imagine most if not all specialists are going to be making business decisions that could possibly affect your access to treatment in the future.<br />
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We clearly have both feet planted on this slippery slope. The only question now is how quickly we fall down it.