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CMS: Health spending share of GDP stabilizes

By Allison Bell

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Health care devoured a huge share of total U.S. national income in 2011, but no more than it ate up in 2009 and 2010.

Micah Hartman and other researchers in the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) have reported that finding in the latest National Health Expenditure Accounts report.

Total U.S. national health expenditures increased 3.9% between 2010 and 2011, to $2.7 trillion.

Health expenditures consumed 17.9 percent of U.S. gross domestic product (GDP), or national income, in 2011. The GDP share figure was the same as in 2009 and 2010.

The 3.9 percent rate of growth in the dollar value of U.S. health care spending was also the same as in 2009 and 2010. For the past three years, health care spending has been growing at the lowest rate that government statisticians have recorded since they began keeping track of the figures 52 years ago.

The rate of growth in spending on nursing home care and other facility-based care increased to 4.5 percent, from 3.2 percent, but the rate of growth in spending on home health care fell to 4.5 percent, from 5.8 percent.

In the acute care sector, the rate of growth in spending on physician services increased to 4.2 percent, from 3.2 percent, but the rate of growth in spending on hospital care fell to 4.3 percent, from 4.9 percent.

The rate of growth in spending on research plummeted, to 1.7 percent, from 8.2 percent.

Growth in the net cost of health insurance — the difference between private insurers’ premiums earned and health benefits paid — plunged to 4 percent, from 9.8 percent.

Spending on government public health activities actually fell 0.5 percent, after increasing 4.9 percent the year before.

Although health insurers had a harder time increasing their own margins, they increased their spending on health care 3.8 percent, to $896 billion. The rate of growth in health insurers’ spending on care was up from 3.4 percent in 2010.

Total health insurance spending increased partly because enrollment increased. The average cost per enrollee increased just 3.2 percent between 2010 and 2011, down from an 4.6 percent rate of increase between 2009 and 2010, the researchers said.

Many of the new enrollees were young adults who gained coverage because of the young adult coverage access provision in the Patient Protection and Affordable Care Act of 2010 (PPACA). Those young adults “belonged to a younger and healthier segment of the population,” and that helped down private health insurance spending, the researchers said.

Increased use of high-deductible health plans also helped to hold down spending on private health insurance, the researchers said.

Consumers spent $308 billion on out-of-pocket health care costs in 2011, up 2.8 percent from what they spent in 2010. The rate of increase in out-of-pocket spending was the highest the researchers have reported since 2007.

Government programs such as Medicare and Medicaid sponsored 45 percent of health care spending, the same as in 2010.

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