Healthcare spending in the United States grew 4 percent in 2009 to $2.5 trillion, or $8,086 per person, the slowest rate of growth in the 50-year history of the National Health Expenditure Accounts.
The NHEA, an annual report by the Centers for Medicare & Medicaid Services' Office of the Actuary, summarizes recent trends in health spending. Available since 1960, it represents the official estimates of total healthcare spending in the United States, measuring annual health spending by the types of goods and services delivered by the programs and payers that pay for that care and by the sponsors who are ultimately responsible for financing that care (private businesses, households and governments).
The 4 percent growth in 2009 was down from 4.7 percent in 2008, the second slowest rate of growth in the history of the NHEA, as the recession led to slower growth in private health insurance expenditures and out-of-pocket spending by consumers and a reduction in capital investments.
Despite the slowdown, the NHEA reported that healthcare spending growth continued to outpace overall economic growth, which declined 1.7 percent in 2009 as measured by nominal Gross Domestic Product. However, health spending as a share of the nation’s GDP continued to climb, reaching 17.6 percent in 2009, up 1 percentage point from 2008, the largest one-year increase in the history of the NHEA.
In comparison to other recent recessions, the health spending share of GDP increased 0.7 percentage point in 1991 and 2001 and 0.8 percentage point in 1982.
The recession, which began in December 2007 and ended in June 2009, affected health spending as many consumers decreased their use of goods and services, partially due to lost employer-based private health insurance coverage and reduced household income. Officials say this led to a deceleration in private health insurance spending, which increased only 1.3 percent in 2009, compared to 3.5 percent in 2008, due primarily to a 3.2 percent drop in enrollment. At the same time, as more people became eligible for and enrolled in Medicaid, growth in that program’s spending accelerated to 9 percent in 2009 following 4.9 percent growth in 2008.
According to the report, with approximately $34 billion in enhanced federal aid for states (provided by the American Recovery and Reinvestment Act of 2009), federal Medicaid spending increased 22 percent and its share of total Medicaid spending reached 66 percent (from a 59 percent share in 2008). In contrast, state Medicaid spending declined 9.8 percent, the largest decline in the program’s history.
The economic downturn also affected consumer out-of-pocket spending, which slowed to 0.4 percent growth in 2009, as spending for dental services, nursing care facilities and continuing care retirement communities and physician and clinical services declined.
A 2.7 percent reduction in expenditures for capital investments also contributed to the slowdown in health spending. In 2009, private and state and local government providers decreased their investment in structures and equipment by 4.3 percent and 1.1 percent, respectively.
According to the report:
- Hospital spending increased 5.1 percent to $759.1 billion in 2009, compared to 5.2 percent growth in 2008.
- Physician and clinical services spending increased 4 percent in 2009 to $505.9 billion, a decline from 5.2 percent growth in 2008.
- Retail prescription drug spending grew 5.3 percent in 2009 to $249.9 billion, after 3.1 percent growth in 2008.
- Spending for freestanding nursing care facilities and continuing care retirement communities increased 3.1 percent in 2009 to $137 billion, a decline from growth of 5 percent in 2008.
- Spending for home healthcare services provided by freestanding facilities grew 10 percent to $68.3 billion, following growth of 7.5 percent in 2008.
- Total healthcare spending by health insurance payers, which includes Medicare and Medicaid programs, increased 5.1 percent in 2009, a slight decline from 5.3 percent growth in 2008.
- Private health insurance premiums grew 1.3 percent in 2009, a decline from 3.5 percent growth in 2008 and the slowest rate of growth in the history of the NHEA.
- Out-of-pocket spending grew 0.4 percent in 2009, compared to 3.1 percent growth in 2008.