* Spending growth at historic low for 3rd straight year
* Signs of acceleration as U.S. moves toward reform
* Even at slow rate, healthcare growth tops inflation
By David Morgan
WASHINGTON, Jan 7 U.S. healthcare spending rose
at a historically low rate of 3.9 percent for the third
consecutive year in 2011, but showed underlying signs of
acceleration as the economy recovered from recession, the Obama
administration said on Monday.
The report, released by the U.S. Centers for Medicare and
Medicaid Services and published in the journal Health Affairs,
said the sprawling national healthcare system totaled $2.7
trillion, or $8,680 per person. It accounted for 17.9 percent of
gross domestic product, a level that has been steady since 2009.
The findings showed a rebound in personal healthcare
spending that benefited physicians, clinics and drugmakers.
Rising job and income growth helped stabilize the private
insurance market after years of enrollment losses.
Hospital spending growth slowed. The growth of the Medicaid
program for the poor dropped by more than half to 2.5 percent,
as job growth slowed the rate of enrollment and cash-strapped
states moved to contain costs by reducing benefits and provider
payments, tightening eligibility and increasing costs to
Medicare, the widely used program for the elderly and
disabled, grew 6.2 percent with a rise in doctor visits and a
one-time change in payment rates for skilled nursing facilities.
Overall, the federal government's share of healthcare spending
swelled to 28 percent in 2011, from 23 percent in 2010.
The figures provide an official snapshot of the scale and
pace of healthcare spending as the U.S. government prepares for
a dramatic expansion in health coverage under President Barack
Obama's healthcare reform law, which is expected to boost
spending and costs beginning in 2014 as more than 30 million
uninsured Americans enter the system.
Rising healthcare costs are blamed by some for undercutting
U.S. economic competitiveness as well as job and wage growth,
and have begun to attract new attention from the administration
and outside experts. The 3.9 percent advance in
2011 healthcare spending outstripped the 2.1 percent GDP
inflation rate, a broad measure that takes in price changes
across the economy.
2011 is the most recent year for which figures are
THE FUTURE IS NOT THE PAST
"The more coverage you have, the more services you use ...
when you get as many as 30 million more people with coverage,
you would expect them to use many more services and you would
expect a higher cost," said Richard Foster, chief actuary at
CMS, part of the U.S. Department of Health and Human Services.
"There is a growing amount of evidence that healthcare
providers are getting it - getting that the future can't be the
same way as the past," he added.
According to official administration projections, healthcare
spending will surge by 7.4 percent to represent 18.2 percent of
GDP in 2014, as millions of people acquire coverage through new
subsidized online marketplaces and an expansion of Medicaid
under the Patient Protection and Affordable Care Act.
But CMS analysts also say the law is expected to put
downward pressure on spending later in the decade.
The results for 2011 were generally in line with forecasts
issued last year. But the authors of Monday's report cast a
question mark over future expectations, noting that economic,
income and job growth in 2011 were less than might have been
expected during an economic recovery.
"This fact raises questions about whether the near future
will hold the type of rebound in healthcare spending typically
seen a few years after a downturn," they wrote.
Monday's report showed Obama's reform law having a minimal
effect on healthcare spending in 2011, although a new rule
allowing adult children to remain on their parents' insurance
plans until they turn 26 helped the private insurance market
rebound by adding 2.7 million new beneficiaries to the rolls.
The law, known to Republican critics as "Obamacare" - a
nickname the White House has also come to embrace - slowed the
rate of growth in prescription drug prices for Medicare and
Medicaid beneficiaries through extended rebates, discounts for
Spending growth for physician and clinical services climbed
to 4.3 percent to $541.4 billion, and hospital spending growth
dipped to the same rate for a total of $850.6 billion.
Prescription drug spending in retail outlets climbed 2.9
percent to $263 billion, versus a historically low growth rate
of 0.4 percent in 2010.
Private insurers saw premiums increase 3.8 percent, partly
as a result of the spread of low-premium, high-deductible
Out-of-pocket spending for consumers climbed 2.8 percent,
accelerating from 2.1 percent in 2010.