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Report Health Care Spending Growth Rate Slowed in 2007

January 6, 2009
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Health care spending grew 6.1 percent in 2007, representing a slight decrease in growth from 6.7 percent in 2006 and the slowest rate of growth in nearly a decade.

Overall, health care spending reached $2.2 trillion, or $7,421 per person, the U.S. Centers for Medicare & Medicaid Services (CMS) said in its annual report on health care spending trends.

The CMS attributed slower growth in retail prescription drug spending and spending associated with administering Medicare health benefits as the main reasons for the lowest rate of health care spending growth since 1998.

“At the same time, health spending continued to consume a larger share of our gross domestic product,” said study lead author Micah Hartman, a statistician with the CMS.

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

Hospital spending in 2007 increased 7.3 percent to $696.5 billion, marking the third straight year of relatively stable spending growth in the sector, the study found. Strong growth in Medicaid spending for hospital care accounted for much of the increase in hospital spending. Hospital price growth in the meantime slowed to 3.5 percent in 2007 from 4.4 percent in 2006.

Spending for physician and clinical services in 2007 grew 6.5 percent to $478.8 billion, the same rate of growth from the previous year.

Medicare spending grew 7.2 percent in 2007 to $431.2 billion, following an 18.5 percent increase in 2006 that was partially driven by the implementation of Medicare Part D. Meanwhile, spending for the Medicaid program grew 6.4 percent in 2007, reaching $329.4 billion.

Private health insurance premiums rose 6 percent to $775 billion in 2007, the same as in 2006.

(For more, read "Special Report: Consumer-Driven Health Care—If You Fix It, They Will Come.")

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

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