Inside This Issue - News
New CMS data shows Rx spending up just 1.2%
January 16th, 2012
WASHINGTON – National health care spending increased less than 4% in 2010 for the second year in a row as Americans delayed drug purchases, doctor visits and hospital care, according to the Centers for Medicare and Medicaid Services (CMS).
The recession, which lasted from December 2007 to June 2009, limited the growth of health spending as many people found themselves out of work and without health insurance, CMS analysts said in a report that was published in the journal Health Affairs.
The after-effects of the downturn curbed the skyrocketing growth of health care spending, which totaled $2.6 trillion, or 17.9% of the economy, in 2010, the CMS report said.
Health expenditures had been rising much faster than the economy. But in 2010 the growth rates were similar, and health care’s share of total economic output was unchanged from 2009. Health spending’s growth rates in 2009 (3.8%) and 2010 (3.9%) were the lowest in the half-century that the government has been collecting such data.
Retail prescription drug spending (10% of total health care spending) grew just 1.2% in 2010 to $259.1 billion, a substantial slowdown from 5.1% in 2009 and the slowest growth rate for such spending ever recorded by the government.
The decline was linked to a decrease in visits to doctors and an increase in the use of medications. The number of scripts filled rose by the same amount as drug spending, just 1.2%.
With consumers tightening their belts, federal health spending jumped to $743 billion in 2010. Some of the increase came from a rise in Medicaid enrollment as well as from a temporary boost in the federal share of Medicaid spending, authorized by the economic stimulus law of 2009.
Medicare spending, for seniors and the disabled, rose in 2010 by 5%, the smallest rate in more than 10 years. The primary cause was a slowdown in spending for the Medicare Advantage managed care program.
Although some provisions of President Obama’s health care reform law took effect in 2010, CMS analysts said they had little effect on the overall level of spending and, in some areas, just shifted payments from one source to another. A striking finding in the report was that rises in the frequency and array of health care services made a nominal contribution to the growth of 2010 spending. Historically, this factor has been a significant source of higher health spending.
Hospitals in 2010 reported a drop in admissions and slower growth in emergency room and outpatient visits.
With doctor visits waning, expenditures for physicians’ services increased only by 1.8%, to $416 billion.
Total health spending averaged $8,402 per person, up 3.1% from 2009, the report said.
For the first time in seven years, private health insurance premiums grew faster than insurers’ payouts. Premiums totaled $849 billion in 2010, while benefits totaled $746 billion. The difference includes administrative costs and profits.
The White House said the differential demonstrated the need for the health care reform law, under which insurers must disclose and justify premium increases above 10%.
“We have worked hard since the passage of the Affordable Care Act in 2010 to lower health care cost growth,” said acting CMS administrator Marilyn Tavenner. “We believe the tools in health reform will help keep health care cost growth low while improving the value of care for consumers.”