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2011 United States Health Spending

By January 8, 2013Commentary

During the course of the recession and very slow recovery, health spending growth in the United States has slowed substantially.  A report from the CMS Office of the Actuary published in Health Affairs gives details on 2011 national health spending.   (HA Article)     The headline number is that spending rose by 3.9% to $2.7 trillion, tracking growth in GDP and therefore remaining at about 17.9% of that number.  Personal health care spending, or the receipt of medical care by individuals, rose faster at 4.1%, driven by faster growth in drug and physician spending. while hospital spending slowed.  Medicaid spending growth was lower, offset by more growth in Medicare, private health insurance and out-of-pocket expenditures.  Spending growth in 2011 seemed to be mostly related to utilization and intensity changes and less to price increases, a significant change from prior years where spending increases were more related to price increases.

While the stable growth in spending, albeit at a high level, seems like a beneficial development, its persistence is uncertain.  Although economic growth has been slow, and health spending by individuals is clearly related to the state of overall economy, there has been some rebound in employment and consequently insurance, which leads to more consumption of health services.  If the reform act is fully implemented next year, we can anticipate much more rapid increases in spending, as many more people will have coverage of some type.  By payer type, spending has grown most rapidly for the federal government, a trend which likely will continue.  Hospitals accounted for $851 billion of spending, and physicians for about $541 billion, while drug spending was $263 billion, with the growth in spending almost entirely due to specialty drugs, which more than offset continued declines due to greater generic use.  Data from 2012 will be key to ascertain the extent to which the health law may be affecting spending and to see if the continued slow recovery leads to more spending as well.

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