News In Brief

Recession slows health care spending in 2009

Marketplace Contributor Jan 5, 2011

The recession had a big impact on health care spending, according to new statistics from the federal government.

The numbers were crunched by the Centers for Medicare and Medicaid Services (CMS) in an annual report published by the journal Health Affairs. This report is the gold standard for tracking all kinds of health care costs. It covers spending by private health insurers and the government, consumers’ out-of-pocket costs, and health care providers’ investments in new equipment.

The report says all that spending rose in 2009 at its lowest rate in five decades – just 4 percent.

Remember what was happening two years ago? People were losing their jobs, and health insurance. Many just stopped going to the doctor. All this has happened during previous economic downturns, of course. But the report’s lead author, CMS economist Anne Martin, told me it usually takes a while for a recession to affect health care spending.

People will cancel their cable TV before forgoing a doctor visit. But this time, the recession hit health care much faster. Martin says that’s because it was so severe.

Private health insurance spending growth was anemic in 2009 – a historic low of 1.3 percent.

The government picked up more of the nation’s health care tab. Medicaid spending almost doubled. In fact, health spending increased to 17.6 percent of the gross domestic product in 2009. That’s a full percentage point higher than in 2008.

What’s ahead? Private sector health care spending is expected to rebound as people get new jobs, with health insurance. But the government’s share will continue to grow.

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