U.S. healthcare spending in 2007 slowed to the lowest yearly increase since 1988, according to a new report published by researchers from the U.S. Centers for Medicare and Medicaid Services (CMS).
Total U.S. healthcare spending in 2007 was $2.2 trillion, or $7,421 per person, representing a 6.1% annual growth rate, according to a study published in Health Affairs (January-February 2009, Vol. 28:1, pp. 246-261).
The study attributes the slower growth primarily to a 45-year low in the growth rate for prescription drug spending (4.9%) in 2007 and slower growth in administrative spending associated with Medicare.
In addition, the report concluded the following:
- Hospital spending growth increased 7.3% in 2007 to $696.5 billion. The gain marks the third straight year of relatively stable growth (6.9% to 7.3%) after an average annual rate of 8% from 2000 through 2004.
- Spending for physician and clinical services advanced 6.5% in 2007 to $478.8 billion, the same rate of growth as in 2006. Spending for physician services was 5.9% in 2007, compared with a growth rate of 6.4% in 2006.
- Medicare spending increased 7.2% in 2007 to $431.2 billion. The report noted that the increase was more in line with the average annual growth of 6.3% from 1995 to 2005, following an 18.5% increase in 2006.
- Out-of-pocket healthcare spending increased 5.3% to $268.6 billion, after posting a gain of 3.3% in 2006. The growth was due to greater out-of-pocket spending for retail prescription drugs, nursing home services, and nondurable medical supplies.
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