CMS: Slight acceleration of health spending growth

Health care spending growth in the United States accelerated slightly in 2006, increasing 6.7% compared to 6.5% in 2005, which was the slowest rate of growth since 1999, according to data recently released by the Centers for Medicare and Medicaid Services (CMS). Health care spending, however, continues to outpace overall economic growth and general inflation, which grew 6.1% and 3.2%, respectively, in 2006.

In 2006, health care spending reached a total of $2.1 trillion, or $7,026 per person, up from $6,649 per person in 2005, according to a report by (CMS). The health spending share of the nation's Gross Domestic Product remained relatively stable in 2006 at 16%, up by only 0.1 percentage point from 2005.

Out-of-pocket spending grew 3.8% in 2006, a deceleration from 5.2% growth in 2005. This slowdown is attributable to the negative growth in out-of-pocket payments for prescription drugs, mainly due to the introduction of the Medicare Part D benefit. Out-of-pocket spending accounted for 12% of national health spending in 2006; this share has steadily declined since 1998, when it accounted for 15% of health spending. Out-of-pocket spending relative to overall household spending, however, has remained fairly flat since 2003.

Total Medicaid spending declined for the first time since the program's inception, falling 0.9% in 2006. The introduction of Medicare Part D, which shifted drug coverage for dual eligibles from Medicaid into Medicare, contributed to the decline in Medicaid spending growth. Other reasons for the decline include continued cost containment efforts by states and slower enrollment growth due to more restrictive eligibility criteria and a stronger economy.

Spending growth for home health services slowed. Spending growth for freestanding home health care services decelerated from 12.3% in 2005 to 9.9% in 2006, also partially due to a reduction in price growth. Despite the 2006 deceleration, home health care continues to be the fastest growing component of all personal health care spending.

The health care spending data can be found on the CMS web site at http://www.cms.hhs.gov/NationalHealthExpendData/01_Overview.asp.