Healthcare spending for the year 2005 slowed for the third consecutive year and is growing at a rate that's comparable with the rest of the economy, the Centers for Medicare and Medicaid Services announced Monday at a press briefing.
The CMS annual healthcare spending report, entitled "National Health Spending In 2005: The Slowdown Continues," notes that the slowing growth rate "might be an encouraging sign for the individuals, businesses and governments that finance healthcare," but stresses that it is unclear whether the phenomenon is indicative of a trend.
The 2005 rate of 6.9 percent, down from 7.2 percent in 2004, marks the lowest spending growth rate since 1999.
Weak growth in prescription drug spending – up 5.8 percent in 2005, down from an 8.6 percent increase in 2004 – was cited as the primary cause for the slowed rate and indicates increased use of generic drugs. This figure also includes a "dramatic decrease in Medicaid prescription drug spending," which rose only 2.8 percent in 2005, down from an 11.6 percent increase in 2004, the report says. This major decline in Medicaid prescription drug spending was attributed to states' Medicaid cost containment efforts in 2005, the authors of the report said during the press briefing.
Aaron Catlin, an economist and one of the authors of the report, said post-recessionary moderation and increased private spending were among the other factors that contributed to the slowing of the growth rate.
Although 2005 Medicare prescription drug spending grew 19.7 percent and outpaced overall Medicare spending growth, Catlin said the CMS did not account for spending on the Medicare Part D prescription drug benefit, which did not take effect until 2006.
Physician and clinical services experienced similar spending growth, as payments from public payers such as Medicare and Medicaid slowed, the report says. Overall growth in Medicare payments to physicians slowed, mostly as a result of increases in patient volume and intensity of services.
The largest healthcare expenditure in the United States remains hospital care, which had a stable spending growth rate and reached $611.6 billion in 2005.
Catlin said that CMS plans to release 10-year projections based on the report's findings in February.