Recession dents growth of healthcare spending

WASHINGTON (Reuters) - The worst economic slowdown since the Great Depression led to slowest growth in U.S. healthcare spending in 50 years, although it still outpaced other sectors, new government data for 2009 shows.

Spending on hospital services, doctor visits, medicines and other health needs rose 4 percent to $2.5 trillion in 2009 compared with 4.7 percent in 2008, economists at the U.S. Centers for Medicare and Medicaid Services said in findings released on Wednesday.

Much of the slowdown stemmed from a drop in the number of people with private insurance as job losses grew and people used fewer healthcare services, the CMS economists said.

“We had an unemployment rate that was higher than any other recent period,” said Anne Martin, lead author of the study, published in the journal Health Affairs. “That contributed to a large number of people losing their health insurance and having much less income to devote to healthcare.”

Still, healthcare spending continued to outpace other sectors to become a larger part of the nation’s economic output. It grew to 17.6 percent of U.S. gross domestic product in 2009, from 16.6 percent the year before.

The recession ended in June 2009, but its effects were still felt across many parts of the healthcare sector and unemployment remained elevated.

Growth in spending on private health insurance shrank to just 1.3 percent from 3.5 percent as the job market contracted, the economists said.

At the same time, growth in government spending on healthcare rose as more people enrolled in the nation’s Medicaid insurance program for the poor.

Growth in spending on the joint federal-state program rose to 9 percent in 2009 from 4.9 percent in 2008.

Despite the overall slowdown, several areas saw larger boosts in spending, including prescription drugs and home healthcare. The recession did not appear to affect spending growth for hospital services, which rose 5.1 percent, about the same as the year before.

SOURCE: Health Affairs, January, 2011.