CMS: Healthcare Spending Grew at Slowest Rate in 50 Years in 2009

Cheryl Clark, January 6, 2011

National healthcare spending rose at its slowest rate in 50 years in 2009 because of the recession, according to analysis by the Centers for Medicare and Medicaid Services.

Not only was federal spending diminished, but consumers spent less out-of-pocket, and private health insurance spending troughed as well.
Healthcare spending grew 4% in 2009, to $2.5 trillion, or $8,086 per person, according to the National Health Expenditure Accounts. That was down from 4.7% in 2008, which had the second slowest growth rate in the NHEA history.

Lest one think the cost curve was significantly bent by this news, however, health spending as a share of the gross domestic product continued to climb, reaching 17.6% in 2009, up 1% from 2008, which was the largest one-year increase in NHEA records.

Contributing to this downturn, healthcare capital investments also were reduced. In 2009, private and state and local government providers decreased investments in structures by 4.3% and in equipment by 1%.
The slowdown could have been worse. Medicaid spending was exacerbated because more people lost their jobs and their health coverage and became eligible, according to an article about the national trend in the January issue of Health Affairs.

"Several factors partially offset the slowdown—most notably, a rapid increase in Medicaid enrollment, which increased the program's rate of spending," wrote the authors led by Anne Martin, a CMS economist.
"Additionally, other private revenues—which include non-operating revenue of health care providers—increased in 2009 after declining in 2008, when hospitals' investment income fell. Prescription drug spending growth was another factor: Spending growth increased more rapidly in 2009 than in 2008, as a result of more rapid growth in the prices of drugs and in the number of prescriptions dispensed."

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