Health Care Spending in U.S. Grew at Lowest Rate in a Decade

Jan. 7 -- TUESDAY, Jan. 6 (HealthDay News) -- Due to slower spending on prescription drugs, health-care spending in the United States grew at the lowest rate in a decade in 2007, a new federal report found.

Yet despite the slowdown, most health-care costs continue to rise, with consumers' out-of-pocket expenses having increased 40 percent in the last 10 years, largely due to an aging population and chronic diseases such as high blood pressure and diabetes, a second report found.

Both reports are published in the January-February issue of Health Affairs.

"National health spending declined to 6.1 percent in 2007, the slowest rate of growth since 1998 and 0.6 percent lower than the 6.7 percent growth in 2006," Micah Hartman, a statistician at U.S. Centers for Medicare & Medicaid Services, and lead researcher of the first report, said during a Monday afternoon teleconference.

"In 2007, expenditures reached $2.2 trillion or $7,421 a person," Hartman said. "Spending share of gross domestic product was 16.2 percent, a slight increase from the 16.0 percent in 2006."

The decline in the rate of health-care spending continues a trend started in 2002, Hartman said.

According to the CMS researchers, the rate of slower growth in prescription drug spending was due largely to slower growth in price increases, increased use of generics, and increased consumer concerns about drug safety.

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Spending on prescription drugs grew 4.9 percent in 2007, down from 8.6 percent in 2006, contributing to more than half of the decreased spending rate. This is the slowest rate since 1963, according to the report.

Another reason for the slowing of health-care spending was a reduction in administrative costs associated with Medicare, which dropped from 62.5 percent in 2006 to 10.7 percent in 2007, largely because of the one-time impact of the Medicare prescription plan that started in 2006.

However, public health-care spending outpaced private spending, including increases in Medicaid spending. Other health-care spending --including hospitals, private health insurance, nursing homes and doctors' fees -- all continued to climb, the report said.