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U.S. Health Care Spending Keeps Rising

U.S. health care spending increased 3.9% in 2010 following record slow growth of 3.8% in 2009; the two slowest rates of growth in the 51-year history of the National Health Expenditure Accounts, the official estimates of total health care spending in the United States issued by the Centers for Medicare & Medicaid Services (CMS).

Total health expenditures reached $2.6 trillion.

That is 17.9% of the nation’s Gross Domestic Product, unchanged from the previous year.

Hospital spending increased 4.9% to $814 billion in 2010, compared to 6.4% growth in 2009. Although hospital spending is growing, it is not accelerating as fast as it did between 2003 and 2006, when spending increased an average of 7.4%, according to the report. The report noted that growth in private health insurance spending for hospital services, which in 2010 accounted for 35% of all hospital care, slowed considerably in 2010.

Median in-patient hospital admissions declined and emergency department and outpatient hospital visits grew more slowly than in 2009, according to the report. It is not clear if these services were less because they were underutilized or unneeded.

Two categories that increased more than the overall growth rate were so-called “other health, residential, and personal care services and home health care.” Spending for these other health services grew 5.3% in 2010 to $128.5 billion. However, this was still a deceleration from the higher growth of 7.7% in 2009. This category includes expenditures for medical services delivered in non-traditional settings (such as schools or community centers), ambulance providers, and residential mental health and substance abuse facilities.

Spending growth for freestanding home health care services slowed in 2010, but still increasing 6.2% to $70.2 billion following growth of 7.5% in 2009, as Medicare and Medicaid spending growth slowed in 2010, according to CMS.

Spending on physician and clinical services increased 2.5% in 2010 to $515.5 billion. The 2010 deceleration from the previous year “reflects a decline in utilization, driven by a drop in total physician visits between 2009 and 2010 and a less severe flu season than in 2009.”

The Republican-dominated House Energy & Commerce Committee took a dimmer view, noting taxpayers are bearing the brunt of the increase, because, in 2010, the federal government’s share increased to 29% under health care reform implementations.

This represents “a substantial increase from its share of 23% in 2007.” However, the shares of the total health care bill financed by state and local governments (16%), private businesses (21%) and households (28%) declined during the same time period, according to the report.

“This means the American taxpayer will bear the brunt of this rapidly rising health care spending,” stated the Committee, in reference to the federal government increase. In fact, in 2014 as the health care law’s Medicaid expansion and cost sharing subsidies take effect, “taxpayer funding of health care is expected to rise even further,” stated the Energy & Commerce Committee, chaired by Fred Upton, R-Michigan.

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