U.S. health spending slows in '08, but federal share soars

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Jan 6 2010

A new government report shows that U.S. health spending grew 4.4 percent in 2008 to $2.3 trillion, the slowest annual rate of increase since federal tracking efforts began in 1960, USA Today reports. That's still faster than the overall economy, which grew only 2.6 percent that year. Private insurance premiums rose by 3.1 percent. "The report suggests the down economy forced Americans to go without care," according to the newspaper. The report's authors wrote, "During periods of recession we often see health care spending to be somewhat insulated. … But in 2008, we saw a bit more of an immediate impact" (Fritze, 1/5).

Bloomberg/BusinessWeek: "Federal spending on medical programs grew almost twice as fast as the total spent on health care in the U.S. in 2008, a pattern aided by Medicare subsidies to private insurers." Medicare and Medicaid spending increased by 8 percent in 2008, compared to the previous year. (The report was published by the Centers for Medicare and Medicaid Services, which runs those programs.) The increases in federal spending "made up more than one-third of the total, the highest level in two decades" (Gibson, 1/5).

Reuters: "While spending on government health insurance programs increased, the report showed that enrollment in private health insurance dropped to 195.4 million people in 2008 from 196.4 million in 2007 partly because of jobs lost in the manufacturing and finance sectors amid the recession." An author of the report said, "The recession that began in December of 2007 seems likely to be one of the longest and most severe since 1933. As such, this event has had a significant impact on health spending in 2008" (Allen, 12/5).

The New York Times: "By slowing the growth of health spending, the recession achieved what a generation of public officials tried unsuccessfully to accomplish. But in their annual report on the topic, federal officials said the deceleration in health spending was a result of the soft economy, and they did not cite any factors that would alter the long-term outlook for continued increases in health spending as baby boomers age and doctors make greater use of new medical technology to treat patients" (Pear, 1/4).

The Wall Street Journal: "The findings give fresh ammunition to both sides of the debate over Congress's health-insurance overhaul. Democrats argue that the continued growth in spending means lawmakers must act quickly to change the system. The report also shows the federal government is taking on a greater portion of the country's health-care spending, playing into Republican warnings that the legislation would give the government even more control of the health-care system" (Adamy and Johnson, 1/5).

The Hill: "Federal spending on healthcare grew 10.4 percent in 2008, an increase from the 6.6 percent rise in 2007… [H]ealthcare spending consumed 36 percent of the federal budget in 2008, compared to 28 percent in 2007." One reason for the increase is that "the economic stimulus bill passed in February 2009 retroactively increased federal spending on Medicaid, and decreased the states' share of the program's expenses" (Young, 1/5).

This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.