Health care spending grew less than 5% in 2008, the slowest growth rate since the federal government officially began measuring it in 1960, according to a report from the Centers for Medicare and Medicaid Services.
Although the rate of increase is slower, health care spending still outpaces the gross domestic product. In 2008, health care spending rose 4.4% to $2.3 trillion, compared with a 2.8% increase in the GDP. And health spending continues to consume a larger portion of the overall GDP, taking up 16.2% in 2008, compared with 15.9% in 2007 (Health Affairs 2010;29:147–55).
The overall slowdown in health spending growth is reflected in slower rates of increase in hospital spending, physician services, retail prescription drug spending, and nursing home and home health services.
For example, spending on physician and clinical services increased 5% in 2008, down from 5.8% in 2007. The deceleration in physician services was driven by a decrease in patient volume, even as the intensity of services picked up in 2008.
In a teleconference, Rick Foster, CMS chief actuary, said this trend was due mainly to the recession. As people lost jobs and health insurance in 2008, they may have opted to seek health care only when their conditions became more serious, and more costly to treat, he said.
The federal government's share of health spending soared to nearly 36% in 2008, up from 28% in 2007, according to the CMS. The increase is due in part to the American Recovery and Reinvestment Act of 2009, which retroactively shifted $7 billion in federal funds to Medicaid at the end of 2008.