DME spending rises by 6.5%

Friday, January 31, 2003

WASHINGTON - Medicare spending for durable medical equipment grew by 6.5% in 2001, more than two percentage points slower than the 8.7% rate increase in overall healthcare spending.

The overall 2001 growth rate, compared with 7.4% in 2000, and 6.1% in 1999, marked the fifth consecutive year in which health spending grew at an accelerating rate, according to the government’s annual health spending report.

In 2001, CMS laid out $4.9 billion for DME, meeting the previous year’s estimate. Overall, healthcare spending in the United States rose to $1.4 trillion in 2001.

Health spending increased more than three times faster than the 2.6% nominal rate of growth in the economy in 2001. Healthcare spending averaged $5,035 per person in 2001, compared to $4,672 in 2000.

CMS economists said in the report that the health share of gross domestic product (GDP) increased from 13.3% in 2000 to 14.1% in 2001. That increase results less from increases in actual health spending than from slower economic growth resulting from the national recession that began in March 2001, which was exacerbated by the September 11 terrorist attacks. This was similar to the spike in the health-spending share of GDP seen before the 1990-1991 recession.

In the 1990s, managed care restrained health expenditure growth by slowing the rate of price increases to providers, and to a lesser extent by slowing growth in quantity of services per capita. While a slowdown in medical price growth curbed overall spending during the mid-1990s, a rise in the quantity and intensity of services consumed, along with slow and steady price increases, caused aggregate spending to accelerate in 2001, the report says. HME