Growth in U.S. Health Spending Stayed Slow in 2010

MONDAY, Jan. 9, 2012 (HealthDay News) -- High unemployment, lower incomes, increased cost sharing and a large drop in the number of people with private health insurance limited the growth of health spending in the United States to 3.9 percent in 2010, according to a new study.

Those factors meant that many people had to do without care or seek less expensive treatment, said researchers at the Centers for Medicare and Medicaid (CMS). They found that total health spending in 2010 was $2.6 trillion, or $8,402 per person.

This was the second year in a row with a sizeable slowing in the growth of health spending in the nation. The rate of growth in 2009 was 3.8 percent, according to the study in the January issue of the journal Health Affairs.

The rates of health spending growth in 2009 and 2010 were the lowest in the 51-year history of the National Health Expenditure Accounts, the official estimates of total health care spending in the United States. Even though the recession was officially declared over in 2009, its effects on the health sector continued into 2010, the study authors said.

"[The recession's impact] was a little more dramatic in 2010 because of a large decline in personal health care spending," lead author and CMS economist Anne Martin said in a journal news release. "Medical goods and services are generally viewed as necessities, but the recession led consumers to be a lot more cautious about utilizing them."

Factors that contributed to the overall low growth in health spending included slow growth in spending for hospital services, physician and clinical services, retail prescription drugs, private health insurance and out-of-pocket spending, and Medicare and Medicaid spending.

The researchers also found that federal, state and local governments paid for about 45 percent of the nation's health bill in 2010, up from 41 percent in 2007.

The federal government's share of health costs rose significantly between 2007 and 2010, from 23 percent in 2007 to 29 percent in 2010 (nearly $743 billion). During that time, the share paid by state and local governments decreased from 18 percent to 16 percent (about $421 billion in 2010), according to the study.

The study also found that the share of the nation's health costs paid by private business declined from 25 percent in 2001 to 21 percent (almost $535 billion) in 2010. Job losses due to the recession resulted in much slower annual growth of employer contributions to private health insurance premiums and payroll tax-based employer contributions to the Medicare Hospital Insurance (Part A) Trust Fund between 2008 and 2010 than between 2000 and 2007.

The share of the nation's health costs paid for by households reached a historic low of 28 percent (about $726 billion) in 2010. After a negligible increase in 2009, household spending on health care rose just 2.8 percent in 2010, the study found.

Among the other findings:

• Spending on private health insurance premiums increased 2.4 percent in 2010 to nearly $849 billion, compared with a 2.6 percent increase in 2009. Spending on private health insurance benefits totaled $746 billion in 2010, a 1.6 percent increase over 2009. That's the slowest rate of growth in the history of the National Health Expenditure Accounts.
• Medicare spending totaled nearly $525 billion in 2010 and accounted for 20 percent of all national health spending. Total federal and state Medicaid spending reached more than $401 billion in 2010 and accounted for 15 percent of the national health care bill.
• Spending on hospital care grew 4.9 percent in 2010 and totaled $814 billion. The rate of growth was 6.4 percent in 2009. The slower rate of growth in 2010 was partly due to patients postponing medical care.
• Spending on physician and clinical services increased at a historic low of 2.5 percent in 2010 and totaled about $516 billion. The growth rate was 3.3 percent in 2009.
• Spending on retail prescription drugs showed a 1.2 percent increase in 2010 and totaled about $259 billion. That historically low growth rate was due to fewer drugs purchased by consumers, a continued increase in the use of generic drugs, the loss of patent protection for certain brand-name drugs, fewer new drugs being introduced and an increase in Medicaid drug rebates.
• Spending on home health services increased 6.2 percent in 2010 and totaled more than $70 billion. The growth rate was 7.5 percent in 2009, making home health care one of the fastest-growing health care sectors in those two years.

More information

The U.S. Agency for Healthcare Research and Quality has more about health costs.