Spending on healthcare goods and services topped $2.2 trillion and grew by 6.1 percent, a decrease from 2006’s 6.7 percent increase. Per person spending was $7,421, according to CMS’ National Health Statistics Group analysts who conducted the report, which appears in the Jan./Feb. 2009 issue of health policy journal Health Affairs.
“Slower spending growth for prescription drugs was one of the major factors driving down overall healthcare spending growth in 2007,” said CMS actuary Micah Hartman, the study’s lead author. “At the same time, health spending continued to consume a larger share of our gross domestic product.”
CMS attributed greater use of generic drugs and the loss of patent protection on some costly prescription drugs as reasons for slowed drug spending.
Drug costs grew by 4.9 percent in 2007 to $227.5 billion, down from 8.6 percent in 2006, the first year the Medicare prescription drug benefit was in effect. Slower rates of growth in Medicare administrative costs also accounted for lower overall spending rates, another consequence of the one-time impact of the Medicare Part D benefit.
Public spending continues to outpace private health spending, growing by an annual rate of 7.2 percent from 2004-2007, compared to 5.9 percent for private spending.
State and local governments spent nearly one-quarter of revenues on healthcare in 2007, with Medicaid accounting for 41 percent of that health spending. The annual report also showed that:
- Medicare spending grew 7.2 percent to $431.2 billion.
- Medicaid spending rose 6.4 percent to $329.4 billion.
- Private health insurance premiums rose 6 percent to $775 billion.
- The percentage of people covered by private health insurance fell from 68 percent in 2002 to 65 percent in 2007.
- Out of pocket spending increased by 5.3 percent to $268.6 billion, an increase from 3.3 percent in 2006, when Medicare Part D took effect. It accounted for 12 percent of national health spending in 2007, part of a long decline. In 1998, it accounted for 14.7 percent of health spending, down from 34.8 percent in 1968.
- The share of household income spent on healthcare rose to 6 percent in 2007, up from 5.4 percent in 2001.
- Overall hospital spending increased by 7.3 percent to $696.5 billion, while hospital price growth decreased from 4.4 percent in 2006 to 3.5 percent in 2007.
- Spending for physician and clinical services, including ambulatory surgery centers, grew 6.5 percent to $478.8 billion.
- The CMS Office of the Actuary examines public and private healthcare spending trends and annually reports the results.
Read the National Health Spending In 2007 report.
