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History says bending the health care expenditure curve may not be feasible

October 6, 2011 in HC Statistics | 1 comment

Many health policy researchers talk about bending the cost curve; this means reducing the rate of health care spending below GDP growth.  U.S. health spending, however, has consistently grown faster than GDP for nearly a century.  Woodward and Wang show that this relationship is surprisingly stable over time, even after the advent of large government entitlements.

“…simple extrapolations of trends observed in the years before Medicare and Medicaid are surprisingly accurate. For example, if one extrapolates the relationship between 1950 and 1960 to the per capita GDP in 2008, the error in predicted per capita NHE in 2008 is 8.6%. Or if one extrapolates the trends defined by the relationship between per capita NHE and per capita GDP in 1929 and 1965 to the per capita GDP in 2008, the error in predicted NHE in 2008 is 11.8%.”

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Largest one-year jump in health spending

March 3, 2011 in HC Statistics | 1 comment

According to a recent Health Affairs paper, health care spending as a share of GDP grew by the largest percentage point increase since the U.S. government has tracked national health expenditure.  Not only did the numerator (health spending) increase–especially for public spending–but the denominator also decreased (i.e., GDP).  The article begins as follows:

“National health spending is estimated to have grown 5.7 percent and reached $2.5 trillion in 2009, despite a projected 1.1 percent decline in gross domestic product, up from 4.4 percent in 2008. The result is an expected rise in the health share of GDP of 1.1 percentage points, to 17.3 percent. This projected rate of escalation would represent the largest one-year increase in the health share of GDP since the National Health Expenditure Accounts (NHEA) began tracking health spending in 1960, and it reflects the severity of the recession that began in 2007…

Health spending by public payers ($1.2 trillion) is projected to have grown much faster in 2009 (8.7 percent) than that of private payers (3.0 percent, to $1.3 trillion). A leading driver of the acceleration among public payers, up from 6.5 percent in 2008, is the expected growth in Medicaid enrollment (6.5 percent) and spending (9.9 percent) as a result of rising unemployment related to the recession.

The relatively low growth of private-payer spending in 2009 was influenced by private insurance enrollment that is expected to have declined 1.2 percent. The decline occurred despite a substantial boost from federal subsidies provided by the American Reinvestment and Recovery Act (ARRA) of 2009.”

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Health Care Spending Distribution in 2008

July 14, 2010 in HC Statistics | 1 comment

National Health Expenditures reached $2.3 trillion, or $7,681 per person. This means that health care services made up 16.2% of the economy. Where did these dollars go? The CBO summarizes where America spends these funds.

Source: CBO Long Term Budget Outlook, June 2010.

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Health Spending Climbs to 16.2% of GDP

January 25, 2010 in HC Statistics | 5 comments

From the CMS Office of the Actuary:

U.S. health care spending growth decelerated in 2008, increasing 4.4 percent compared to 6.0 percent in 2007, as spending growth slowed for nearly all health care goods and services, particularly for hospitals. Health spending growth for state and local and private sources of funds also slowed while federal health spending growth accelerated in 2008. Total health expenditures reached $2.3 trillion in 2008, which translates to $7,681 per person and 16.2 percent of the nation’s Gross Domestic Product (GDP). Despite slower growth in overall health expenditures, the share of GDP devoted to health care increased from 15.9 percent in 2007.

A detailed table of health expenditures by service type (e.g., hospital, physician services) can be found here.

Also interesting is the changes in spending by payor.  While overall Medicaid expenditure growth decelerated between 2007 and 2008, the composition of expenditures changed significantly.  Federal Medicaid spending increased by 8.4%, but state Medicaid spending actually decrease by 0.1%.  A table providing more information on the changes health expenditures by payer is available here.

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