CMS reports slow growth in health spending

Sunday, January 11, 2009

WASHINGTON - Health spending in the United States reached its lowest point in years in 2007, but continues to outpace overall economic growth, CMS reported last week.

Health spending grew 6.1% in 2007 to $2.2 trillion or $7,421 per person. Economic growth: 4.8%.

CMS attributes its slowest rate of growth since 1998 to slow growth in spending on retail prescription drugs and administrative costs.

Retail prescription drug spending grew 4.9% in 2007 compared to 8.6% in 2006. Health spending by public programs, including Medicare and Medicaid, grew 6.4% in 2007 compared to 8.2% in 2006.

While CMS highlighted slow growth in retail prescription drug spending, The VGM Group, in an update to members, pointed to a much lower 0.9% growth rate for durable medical equipment spending.

"This is the second consecutive year that DME has been the healthcare category with the lowest growth rate," VGM stated.

CMS also reported that the health spending share of the nation's Gross Domestic Product (GDP) reached 16.2% in 2007, a 0.2% increase from 2006.

Additionally, CMS reported that Medicaid spending growth for hospital care, home health care, dental care, and physician and clinical services grew in 2007 as "states increased provider payments and continued to provide in greater numbers home and community-based services as less-costly alternatives to institutional care."

The report is a reminder that the cost of health care continues to be a major concern for the public and the government, stated CMS Acting Administrator Kerry Weems in a release.

"We must redouble our ongoing efforts to reform the delivery of healthcare services in this country to bring about the goal of affordable, high quality health for all Americans," he stated.