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Growth in Health Care Spending Expected to Slow, Government Says

February 27, 2009
The growth in national health care spending is projected to slow in 2009 compared with 2008, but it will still continue to outpace growth in the economy because of the recession, the Centers for Medicare & Medicaid Services estimates in a new report.

The study, which projects national health care spending trends through 2018, also estimates that health care spending would have reached $2.4 trillion by 2008.

Growth rates for health care spending are projected to remain steady at 6.1 percent in 2008, the same rate as in 2007, and then slow to 5.5 percent in 2009.

Despite the slowdown, however, health care’s share of the economy in 2009 will experience its largest one-year increase ever recorded, from 16.6 percent in 2008 to 17.6 percent, according to the report.

By 2018, health care spending is projected to reach $4.4 trillion and consume 20.3 percent of the gross domestic product, according to the CMS analysis.

In other trends, growth in spending on hospital care is expected to slow to 5.7 percent in 2009 from 7.2 percent in 2008, as a result of slower private spending growth for hospital care.

During the next 10 years, spending on hospital care is expected to reach nearly $1.4 trillion, up from a projected $746.4 billion in 2008.

The growth in spending on physicians also is expected to slow.

Growth in spending among public payers is expected to accelerate from 6.4 percent in 2007, or $1 trillion total, to 7.4 percent, or $1.2 trillion total, in 2009, driven largely by faster growth in Medicaid enrollment and spending.

By comparison, growth in private health spending is expected to fall to a 15-year low of 3.9 percent in 2009, when such spending will reach $1.3 trillion, as a result of slower income growth and an expected decline in private health insurance coverage.

The CMS predicts the growth rate in national health spending will rise again in 2011 as economic conditions improve and as growth in public and private health spending rebounds. Projections reflect current law and do not take into account any recent legislation including the stimulus package signed last week, CMS officials told reporters.

Filed by Jennifer Lubell of Modern Health Care, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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