Healthcare News & Insights

Health care spending increases slow — because no one can afford it

It was a second year of slower spending on health care. That’s not because services are more affordable, though.

A new report by federal analysts found that the reduced spending in 2010 (the last year for which data is available) was due to a combination of high unemployment, lower household income, a reduction in the number of people with private insurance and some folks opting to skip needed care (or choose cheaper options) because they simply couldn’t afford the preferred treatment.

According to the report by CMS, in 2010, health spending grew just 3.9%, only 0.1 percentage point faster than 2009. Total health spending in 2010 was $2.6 trillion, about $8,402 per person. To date, 2009-2010 had the slowest rate of growth of any two-year period in the 51 years this data has been tracked.

More troubling, although this rate is “slowing,” health spending still grew exceptionally faster than the rest of the economy. About 45% of the spending was shouldered by government agencies at all levels — up from 41% in 2009. That increase is largely the result of growing Medicaid enrollment and enhanced federal matching rates from the American Recovery and Reinvestment Act.

At the household level, spending was up 2.8% in 2010. One-third of such spending was employee contributions to private health insurance. People weren’t necessarily getting more for their money though. A significant portion of the increased spending was due to higher cost-sharing requirements for some employees, a trend toward plans with higher deductibles and/or co-payments, and many people having to pay out-of-pocket for health care after losing their health insurance coverage.

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