CMS boasts historic low growth rate in healthcare spending

Thursday, January 12, 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.

Read more from the report.