10 Jan Health Care Spending Slows, Takes Record Bite from GDP

ImagingBiz.com | The recession put the squeeze on U.S. health care spending in 2009, but health care expenditures also took a bigger, record-setting bite out of the nation’s gross domestic product (GDP), according to a report released earlier this week by CMS.

Shedding light on consistently spiraling health care costs, total health care spending saw a 4% increase last year, reaching $2.49 trillion—or $8,086 per person. This represents both a drop from a 4.7% increase in such spending in 2008 and the smallest percentage rise in total annual health care outlay in the 50 years since the federal government began tabulating it. Yet despite recession-induced cuts in out-of-pocket spending by consumers and the curtailment of many hospitals’ expansion plans, health care spending consumed a greater, 17.6% share of the economy—up one percentage point from 16.6% in 2008.

More specifically, the report indicates, federal spending on Medicaid rose by nearly 22% in 2009—due in part to increased consumer enrollment in the program amid the recession. The inclusion of federal Medicaid spending in the economic-stimulus bill passed in early 2009 also served as a catalyst here. Several hard-hit states initiated 10% cuts in their Medicaid spending in 2009, with federal support helping them to grapple with enrollment increases.

Some states reportedly claim their Medicaid burden remains excessive, especially given the anticipated addition of some 16 million people to the rolls starting in 2014 as dictated by the new health law. Sen. Orrin Hatch (R-Utah), the incoming top Republican on the Finance Committee, has said the recent increase in Medicaid spending “will pale in comparison to what federal and state budgets will face under the unprecedented Medicaid expansion in the health law.”

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