Health Spending Continues Slow Growth in 2011

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For three consecutive years overall health care spending in the U.S. has grown at the slowest rate in 52 years. However, one area where there was growth was spending for personal health care goods and services.

For three consecutive years health care spending in the U.S. has grown at the slowest rate in 52 years, according to a report by the Centers of Medicare and Medicaid Services (CMS).

CMS’ analysis, published in Health Affairs, of total health care spending in 2011 estimates that the rate of growth was just 3.9%, identical to spending in 2009 and 2010 and below pre-recession levels of spending growth. Total health care spending in 2011 was $2.7 trillion, which is 17.9% of the nation’s gross domestic product.

While there was a decline in the cost of insurance, noncommercial medical research and in the spending in government public health activities, the growth of spending for personal health care goods and services increased.

“On the whole, the impact of provisions of the Affordable Care Act (ACA) on aggregate health spending growth in 2010 and 2011 was minimal,” wrote Chris Fleming on the Health Affairs blog. “However, there was some impact on certain subcomponents of national health expenditures; for example, private health insurance spending and enrollment were impacted by the provision that expanded private health insurance coverage to dependents of enrollees up to age 26.”

Private health insurance enrollment increased by a net 1 million people last year, according to the report, which includes 2.7 million new young adults added because of the provision in ACA. Premiums for private plans increased 3.8% and out-of-pocket spending rose by 2.8% (compared to 3.4% and 2.1%, respectively, in 2010).

Major areas where spending in 2011 grew over 2010:

Retail prescription drugs (2.9%)

Physician and clinical services (4.3%)

Medicare spending (6.2%)

Private health insurance (3.8%)

Out-of-pocket spending (2.8%)

Major areas where spending in 2011 decreased over 2010:

Hospital spending (-4.3%)

Medicaid expenditures (-2.5%)