The good news is that U.S. healthcare spending growth slowed to 4.4% in 2008, down from 6% in 2007 and the slowest rate of growth in nearly 50 years, according to data from the Centers for Medicare & Medicaid Services. The bad news is that the main reason for the slowdown was the recession; healthcare costs still rose faster than GDP, which was up 2.6% in 2008. So if the issue is excess cost growth in healthcare (see prior post), 2008 was better than the past 40 years but still a problem — especially since healthcare’s share of GDP tends to spike during and immediately following a recession; in 2008, healthcare’s share of GDP rose 300 basis points to 16.2%, compared to a 100 basis point increase in each of the prior three years. Overall, U.S. healthcare spending hit $2.3 trillion in 2008 or $7681 per person, CMS reports.
You can really see the impact of the recession in consumer out-of-pocket spending, which rose just 2.8% in 2008, compared to 6% in 2008. Another category impacted by tight consumer purses strings — prescription drug costs rose 3.2% in 2008, compared to 4.5% in 2007. In contrast, federal government spending rose 10.4% in 2008, compared to 6.6% in 2007; the federal share of national healthcare expenditures rose 200 basis points to 25% in 2008 (tied partly to stimulus spending), while the state and local government share fell 100 basis points to 17%. We asked for more government involvement, and so we’re getting it.
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