Recession helps slow healthcare spending growth to 4% in '09: CMS

Healthcare spending in 2009 grew at the slowest rate in five decades, rising 4% to $2.5 trillion—or $8,086 per person—while still outpacing overall growth in the gross domestic product, according to an annual report from the CMS.

And that spending as a share of the nation's gross domestic product rose to 17.6% in 2009, representing a 1 percentage point increase from 2008—the largest one-year increase in the 50-year history of the National Health Expenditure Accounts.

Compiled by the CMS Office of the Actuary, the report indicated that the recession from December 2007 until June 2009 had a strong influence on total healthcare spending, which was due primarily to slower growth in private insurance expenditures; a decline in spending on structures and equipment; and slower growth in out-of-pocket spending. Meanwhile, as more Americans became eligible for and enrolled in Medicaid, growth in that federal program jumped 9% in 2009, compared with a 4.9% growth rate the previous year.

“No one should take solace in the fact that health spending grew at a lower rate in 2009,” Sen. Orrin Hatch (R-Utah), the new ranking member of the Senate Finance Committee, said in a statement. “This report doesn’t reflect the crushing increases in health costs and premiums facing American families and employers due to the recently enacted $2.6 trillion health spending law. Furthermore, this report details the massive increases in federal Medicaid spending due to the recession. But this increase will pale in comparison to what federal and state budgets will face under the unprecedented Medicaid expansion in the health law,” Hatch added.

The report’s findings, which will be published in the January issue of the journal Health Affairs, also showed hospital spending increased 5.1% to $759.1 billion in 2009, compared with a 5.2% growth rate in 2008; physician and clinical services spending rose 4% to $505.9 billion, down from a growth rate of 5.2% the prior year; and retail prescription drug spending grew 5.3% to $249.9 billion, following a 3.1% increase in 2008.