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February 14, 2018

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Rate of Growth in National Health Spending Slows

March 2, 2011:

Despite the slow rate of growth, total health care spending continued to outpace overall economic growth, which experienced a decline of 1.7 percent in 2009 as measured by nominal gross domestic product (GDP). Health care spending, as a share of the nation’s GDP, kept climbing and reached 17.6 percent in fiscal 2009—an increase of 1 percent over 2008. This is the largest one-year increase in the NHEA’s history, as compared with other recent recessions. For instance, the health spending share of the GDP increased by 0.7 of a percentage point in years 1991 and 2001, and 0.8 of a percentage point in 1982.

The report, prepared annually by CMS’s Office of the Actuary, is based on the most current data available for the purposes of summarizing recent trends in health care spending. Reports are available dating back to 1960.

The NHEA reflect official estimates of total health care spending in the United States as measured by the different types of goods and services delivered—whether through hospital care, physician services, or retail prescription drugs, etc.—as well as by the programs and payers (such as private health plans, Medicare, and Medicaid) paying for that care, and by those who are ultimately responsible for financially providing that care, such as private businesses, households, and governments.

During the recession that started in December 2007 and ended in June 2009, consumers decreased their use of goods and services, including health care. This occurred in part because of lost employer-based private health insurance coverage and reduced household income due to layoffs. This led to a deceleration in private health spending, which increased only 1.3 percent in 2009 compared with 3.5 percent in 2008. At the same time, more people became eligible for and subsequently enrolled in Medicaid; growth in that program’s spending increased 9 percent in 2009 following an almost 5 percent increase in 2008.

The American Recovery and Reinvestment Act of 2009 provided enhanced federal aid for states to the tune of approximately $34 billion, increasing federal Medicaid spending 22.0 percent for 2009. The federal share of total Medicaid spending reached 66 percent, a 7 percent increase over 2008. However, state Medicaid spending saw a decline of 9.8 percent, the largest decline in state Medicaid’s history.


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