U.S. health care spending slows for the first time in seven years

Sunday, January 16, 2005

January 17, 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.
"This is good news for the public and our health care system and is the result of changes designed to slow down the growth in spending," said Health and Human Services Secretary Tommy G. Thompson.  "But we have more to do before we can declare victory over rising health care costs."
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 3 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.
"The administration and the Congress have taken important steps in recent years to contain costs in our major health care programs while improving the quality of care that patients receive," said CMS Administrator Mark B. McClellan. "And as we implement the new Medicare law, we intend to do even more in the year ahead."
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.