Managed Healthcare Executive - February 2009 - (Page 6) NEWS ANALYSIS Healthcare spending rise in 2007 not as steep as recent years Major reform required to keep growth in line with nation’s economy JILL WECHSLER WASHINGTON BURE AU CHIEF SENIOR EDITOR NATIONAL REPORTS — The healthcare community cheered the recent news that healthcare spending in the U.S. rose only 6.1% in 2007, the slowest rate of growth since 1998. Despite the slowdown, analysts at the Center for Medicare and Medicaid Services (CMS), noted that expenditures reached $2.2 trillion. Outlays for health accounted for 16.2% of Gross Domestic Product (GDP)—up slightly from 16% in 2006, to consume a larger portion of the overall economy. Expenditures for hospitals, physicians and other healthcare products and services rose faster than in ation, a trend likely at be aggravated by the recession, according to CMS actuary Richard Foster at a January brie ng. “So we still have an a ordability problem,” Foster said, adding that he does not expect the such a low spending rate to continue. LESS FOR DRUGS A factor driving down 2007 health expenditures is slower growth in outlays for prescription drugs, according to Micah Hartman, statistician at the CMS O ce of the Actuary. Retail prescription drug spending growth slowed dramatically, from 8.6 % in 2006 to 4.9% in 2007—the slowest since 1963, as reported in “National Health Spending in 2007,” Health A airs, January/February 2009. 6 FEBRUARY 2009 Ralf Hiemisch/fStop/Getty Images TRACEY WALKER healthcare spending grew 11.3% in 2007 compared with 10.3% in 2006. The data for 2007 re ects an overall slowdown in health spending growth over the last ve years. Private health insurance premiums rose 6% in 2007, the same as in 2006, while bene t payments increased 6.6%. Rate of Consequently, the ratio of the growth net cost of private health insurance to total private health inin U.S. surance premiums was 12.2% healthcare in 2007 versus 12.8% in 2006, spending, typical of a downturn in the underwriting cycle. 2007 Out-of-pocket spending growth accelerated in 2007, to 5.3%, compared to 3.3% in Source: CMS 2006, due primarily to higher out-of-pocket payments for prescription drugs, nursing home That slowdown was due primarily to increased utilization of generic drugs, services, and nondurable medical which accounted for 67% of drug dis- supplies. pensing in 2007, up from 63% in 2006, CMS reported. That shift re ects more TECHNOLOGY FIX blockbuster drugs coming o patent and Many analysts look to new technology the expiration of six-month exclusivity to curb spending while advancing qualperiods for some branded products. ity of care. But to continue to embrace Meanwhile, outlays for most healthcare technological innovations, says Sam goods and services sectors grew at similar Nussbaum, MD, WellPoint chief medirates or faster than in 2006. Hospital spend- cal o cer, “we need to reduce the 30% ing grew 7.3% compared with 6.9% in of healthcare spending that goes toward 2006, due to strong growth in Medicaid redundant or inappropriate care. New outlays. Spending for physician and clini- technology, such as e-prescribing, can cal services increased 6.5% in both 2006 provide better care and potentially reand 2007, curbed slightly by legislated duce some costs.” changes that reduced Medicare payments The report might seem like good news, for imaging services. says Jonathan B. Oberlander, a health Spending for stand-alone clinics and ur- politics and policy expert and associate gent care centers services remained strong. professor, University of North CaroSpending growth for both freestand- lina at Chapel Hill. “But in fact, the ing nursing homes and home healthcare healthcare spending rate is rising faster services accelerated in 2007, due in than general in ation. Many Ameripart to faster price growth in both cans will lose their health insursectors. Free-standing nursing home spend- ance, and the uninsured population ing grew 4.8% in 2007 compared with will grow dramatically unless the federal 4.0% in 2006, and freestanding home government takes decisive action.” MHE 6.1%
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