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U.S. Health Spending Growth Slows for 2nd Year in 2010

U.S. health care spending experienced historically low rates of growth in 2009 and 2010 according to the annual report of national health expenditures (NHE) from the Centers for Medicare & Medicaid Services (CMS) published in the January issue of the journal Health Affairs.

Analysts at CMS report that the increase in spending for 2009 represents the lowest rate of increase in the entire 51 year history of the NHE.

The low rate of growth, the data show, reflects lower utilization in health care than in previous years. The report notes that U.S. health care spending grew only 3.9 percent in 2010, reaching $2.6 trillion or $8,402 per person, just 0.1 percentage point faster than in 2009.

Private businesses financed $534.5 billion, or 21 percent of total health spending in 2010, down from a 23-percent share in 2007.

Other major findings from the report include:

Hospital spending grew 4.9% in 2010, down from 6.4% in 2009. Median inpatient hospital admissions declined in 2010 and increases in emergency department and hospital outpatient visits grew more slowly in 2010 than 2009.

There was a drop in total physician visits from 2009 to 2010 and this drop accounted for the 2.5% increase in physician and clinical services spending in 2010 compared to 3.3% increase in 2009.

Retail prescription drug spending only increased 1.2% in 2010 due to slower growth in the number of prescriptions filled, continued increase in use of generics, lower base costs due to loss of several significant patents, fewer introductions of new drugs, and an increase in Medicaid drug rebates.

Private health insurance, including the portion contributed by employers, saw an increase of 2.4% in premiums in 2010, only slightly below the 2.6% increase in 2009. A decline in private health insurance enrollment, increases in cost sharing, and a shift by some consumers to lower-cost plans, resulted in this slight slowdown.

Out-of-pocket spending grew more rapidly in 2010 (1.8%) than in 2009 (0.2%) reflecting the higher cost-sharing requirements, consumers shifting to lower-cost plans with higher deductibles and/or copayments, and the continued increase in those losing their health insurance.

The federal government financed 29% of total health spending in 2010, up from only 23 percent in 2007. Private businesses financed 21% of total health spending in 2010.

Read a summary with more details.

Posted by Cristie Travis at 4:56 PM

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