Healthcare spending slows in 2003

Monday, February 28, 2005

WASHINGTON - The pace of health spending growth slowed in 2003, marking the first deceleration in national health spending growth in seven years, a report by the Centers for Medicare & Medicaid Services Office of the Actuary shows. Spending growth for home health agencies, however, saw a modest 1% boost in their growth rate.

Health expenditures in the United States grew 7.7% in 2003 to $1.7 trillion, down from a 9.3% growth rate in 2002. On a per capita basis, health spending increased by $353 to $5,670. Health spending accounted for 15.3% of gross domestic product in 2003, outpacing growth in the overall economy by nearly three percentage points.

Publicly funded health care saw significant savings in 2003. Total public spending growth slowed significantly from 9.7 % in 2002 to 6.6% in 2003. Driving this was a slowdown in Medicaid spending growth, from 12.6% in 2002 to 6.9% in 2003 and the expiration of supplemental funding provisions in the Balanced Budget Refinement Act (BBRA) and the Medicare, Medicaid and SCHIP Benefits Improvement Act (BIPA) to Medicare providers.

Medicare spent $283 billion in 2003, or 17% of the $766 billion spent on healthcare by the public sector.

Private payers (primarily private health insurance and payments by individuals for co-pays, deductibles, and services not covered by insurance) funded more than half of national health expenditures in 2003, or $913.2 billion.