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Growth in National Health Spending Is Lowest Since 1998

February 10, 2009:

The 2007 United States health care spending increased at the lowest rate of growth in nearly a decade, the Centers for Medicare and Medicaid Services announced in January. Even so, health care spending consumed a larger share of our gross domestic product.

Spending on health care services and goods was reported to be $2.2 trillion, an increase of 6.1 percent, as compared with a 6.7 percent increase in 2006. Per person spending was $7,421, according to a report from CMS analysts. This report by theCMS Office of the Actuary can be found in the January/February 2009 issue of the health policy journal Health Affairs.

Slower spending growth for prescription drugs was one of the major factors driving down overall health care spending growth in 2007.

Health spending growth overall surpassed the slowing economy and consumed a larger portion of gross domestic product in 2007, reaching 16.2 percent, up from 16 percent in 2006.

The slowdown in the rate of growth for prescription drug spending contributed to more than half of the overall deceleration of growth in national health spending. Outlays for prescription drugs grew 4.9 percent in 2007, down from 8.6 percent in 2006.

CMS attributes increased use of generic drugs and the loss of patent protection on some costly prescription drugs as reasons for much of the slowed drug spending. Another contributing factor was that large chain retailers started offering consumers low-cost generic medications. Increased safety concerns for certain prescription drugs in 2007 also likely influenced the drug spending trend. The Food and Drug Administration issued 68 “black-box” warnings, compared with 58 in 2006 and 21 in 2003.

All of these factors remind us that the cost of health care is still a genuine concern for Americans. We need to continue with our efforts to deliver high-quality health care at an affordable price. 

Nichole VanHorn
Clinical/Technical Editor


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