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CMS: Healthcare spending increased to $2.5 trillion in 2009
January 10, 2011--The recession slowed
healthcare spending in 2009, according to a
Centers for Medicare & Medicaid Services
(CMS) report on national health
expenditures. However, sectors including
prescription medications and freestanding
home healthcare services logged increases.
Although U.S. healthcare spending increased
4.0 percent in 2009, this represented a drop
from the 4.7 percent increase in 2008. Total
health expenditures reached $2.5 trillion,
or $8,086 per person in 2009—17.6 percent of
the nation’s gross domestic product (GDP),
according to the report.
Hospital spending increased 5.1 percent to
$759.1 billion in 2009, compared to 5.2
percent growth in 2008.
Growth in 2008 and 2009 was much slower than
the trend between 1999 and 2007, when
spending increased an average of 7.2 percent
The slower growth in 2009 was influenced by
decelerating private health insurance
spending and slower price growth. Partially
offsetting these factors was an increase in
Medicaid spending, as Medicaid enrollment
increased considerably in 2009, CMS stated.
Spending on physician and clinical services
increased 4.0 percent in 2009 to $505.9
billion, a deceleration from 5.2 percent
growth in 2008. Slower growth in the use and
intensity of services in 2009 was partially
offset by increasing prices. Spending for
other professional services, such as
physical therapy, chiropractic medicine, and mental
health, also decelerated in 2009,
increasing 5.3 percent to $66.8 billion.
Spending in this area increased by 6.6
percent in 2008.
Spending for residential and personal care
services accelerated in 2009, increasing 8.3
percent to $122.6 billion compared to 4.6
percent growth in 2008.
This category includes expenditures for
medical services delivered in
non-traditional settings, such as schools or
community centers, ambulance providers, and
residential mental health and substance
In addition, spending for freestanding home
healthcare services increased 10 percent in
2009, to $68.3 billion, following growth of
7.5 percent in 2008.
Spending for freestanding nursing care
facilities and continuing care retirement
communities increased 3.1 percent in 2009 to
$137.0 billion, a deceleration from growth
of 5.0 percent in 2008.
Prescription drug spending accelerated in
2009 to $249.9 billion, increasing 5.3
percent after 3.1 percent growth in 2008,
driven by faster growth in both prices and
utilization, according to the report.
Spending for durable medical equipment,
which includes items such as eyeglasses and
hearing aids, decreased 0.8 percent to $34.9
billion after increasing 2.3 percent in
Spending for other non-durable medical
products, such as over-the-counter
medicines, decelerated in 2009, increasing
2.2 percent to $43.3 billion compared to 3.1
percent growth in 2008.
Medicare spending grew 7.9 percent in 2009
to $502.3 billion, the same rate of growth
as in 2008. Spending for fee-for-service (FFS)
Medicare accelerated in 2009, increasing 5.5
percent, compared to 4.4 percent growth in
Medicare Advantage (MA)
spending increased 15.8 percent in 2009
following 21.4 percent growth in 2008 and
was primarily attributable to a continuation
of significant increases in MA enrollment.
Total Part D spending (which includes
spending for benefits, government
administration, and the net cost of health
insurance) increased 9.3 percent to $54.5
billion in 2009.
Total Medicaid spending grew 9.0 percent in
2009 to $373.9 billion, an acceleration from
4.9 percent growth in 2008, and was driven
by a 7.4 percent increase in Medicaid
Federal Medicaid expenditures increased 22
percent, while state Medicaid expenditures
declined 9.8 percent. This difference in
growth is due to a significant increase in
the Federal Medical Assistance Percentages (FMAP)
used to determine federal Medicaid payments
to states—a provision of the American
Recovery and Reinvestment Act of
Private health insurance
premiums grew 1.3 percent in
2009, a deceleration from 3.5 percent growth
in 2008. Benefit payment growth also slowed,
from 4.4 percent in 2008 to 2.8 percent in
“These trends were heavily influenced by the
recession as private health insurance
2009, spending for benefits increased faster
than premiums, and as a result, the net cost
of private health insurance (or the
difference between premiums and benefits)
fell to an 11.1 percent share of total
private health insurance spending from 12.4
percent in 2008—a continuation of its recent
decline,” CMS stated.
Out-of-pocket spending grew 0.4 percent in
2009, a deceleration from 3.1 percent growth
in 2008, as these expenditures declined for
dental services, nursing care facilities and
continuing care retirement communities, and
physician and clinical services, according
to the report.