National Health Spending Rose Only 3.7 Percent In 2012

Health care spending in the United Statues rose on 3.7 percent in 2012, up to $2.8 trillion, according to research from the Centers for Medicare and Medicaid Service’s (CMS) Office of the Actuary. According to the research, the 3.7 percent growth is similar to spending growth rates since 2009, which increased between 3.6 percent and 3.8 percent annually. This means that growth during all four years has occurred at the slowest rates ever recorded in the fifty-three-year history of the National Health Expenditure Accounts.

In addition, the study found that total health care spending in 2012 grew more slowly than the gross domestic product (GDP). This means that the share of the economy devoted to health care fell slightly from its 2011 level of 17.3 percent to 17.2 percent in 2012.

“The low rates of national health spending growth and relative stability since 2009 primarily reflect the lagged impacts of the recent severe economic recession,” said Anne B. Martin, economist at the CMS Office of the Actuary. “Additionally, 2012 was impacted by the mostly one-time effects of a large number of blockbuster prescription drugs losing patent protection and a Medicare payment reduction to skilled nursing facilities.”

The study also found the following:

• Personal health care spending (for health care goods and services), which accounted for 85 percent of total national health spending, increased by 3.9 percent in 2012, 0.4 percentage points faster than in 2011.

• Hospitals spending grew 4.9 percent in 2012, to $882.3 billion.

• Physician and clinical services increased 4.6 percent, to reach $565.0 billion in 2012.

• Out-of-pocket spending reached $328.2 billion in 2012, up 3.8 percent in 2012.

• Spending growth for retail prescription drugs from 2.5 percent in 2011 to 0.4 percent in 2012. The study noted that this reduced growth rate was driven largely by a slowdown in overall prices for prescription drugs as an unusually large number of blockbuster drugs (such as Lipitor, Plavix, and Singulair) lost patent protection in late 2011 and in 2012, which led to increased sales of lower-cost generics.

The study was published in the January issue of Health Affairs. For more information, visit http://content.healthaffairs.org/content/33/1/67.abstract.

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