Health care spending down, CMS says

Nominal health spending in the United States grew 4.4 percent in 2008, to $2.3 trillion, or $7,861 a person, according to data from the Centers for Medicare and Medicaid Services.

The number is the lowest since CMS started tracking expenditures during 1960. However, health care spending continues to outpace overall economic growth, which grew by 2.6 percent during 2008.

“This report contains some welcome news and yet another warning sign,” said Jonathan Blum, director of the CMS Center for Medicare Management. “Health care spending as a percentage of GDP is rising at an unsustainable rate. It is clear we need health insurance reform now.”

The growth rate during 2008 decreased from 6 percent during 2007, as spending slowed for nearly all health care goods and services, particularly for hospitals.

But spending as a share of the nation’s GDP continued to climb, reaching 16.2 percent during 2008, up 0.3 percentage points from 2007.

The economic downturn significantly affecting health spending as more Americans could not afford to spend their limited resources on health care and instead went without care. This led to slower growth in personal health care paid by private sources of funds. The recession also made it difficult for many Americans to afford private health insurance coverage, leading to lower growth in private health insurance benefits.

Other issues released by the CMS annual report:

– Hospital spending grew to 4.5 percent to $718.4 billion, compared to 5.9 percent during 2007, the slowest rate increase since 1998.
– Physician and clinical services spending increased 5 percent, a decrease from 5.8 percent the year before.
– Retail prescription drug spending growth also decelerated to 3.2 percent during 2008 as per capita use of prescription medications declined slightly, mainly due to impacts of the recession, a low number of new product introductions and safety and efficacy concerns.
– Spending growth for both nursing home and home health services decreased during 2008. Nursing home spending grew 4.6 percent, down from 5.8 percent the year before.
– Private health insurance premiums grew 3.1 percent during 2008, a decrease from 4.4 percent during 2007.