2008 Healthcare Spending Experiences Slowest Growth Rate in 48 Years

Americans spent an average of $7,681 per person on healthcare during 2008, just a 3.5 percent rise over the previous year – the slowest growth rate in 48 years.  According to a report issued by the Department of Health and Human Services, healthcare spending totaled $2.3 trillion in 2008 and accounted for 16.2 percent of the GDP.Healthcare spending rose just 3.5 percent in 2008.

The culprit is the recession, which achieved what a generation of public officials attempted without success.  Federal officials said the slowdown in health spending resulted from the soft economy, people delaying elective procedures, for example, and did not cite any factors that will alter the long-term outlook for continued increases as baby boomers age and physicians rely more on new technologies to treat patients.

According to Micah Hartman, a government statistician who contributed to the report, federal spending for health services and supplies grew 10.4 percent in 2008 and equaled 36 percent of federal receipts, up from 28 percent in 2007.  “In 2008, federal Medicaid spending increased 8.4 percent – the highest rate of growth since 2003 – while state spending declined by 0.1 percent, the first decline in these expenditures in program history,” Hartman said.  “Spending for healthcare by private businesses grew just 1.2 percent in 2008, in part because of a drop in the proportion of employer-sponsored insurance paid by employers.  Private business’ health spending remained relatively flat as a share of compensation at 7.9 percent.”

In other findings, the report noted that “private health insurance premiums and benefits grew in 2008 at their slowest rate since 1967, 3.1 percent and 3.9 percent respectively.”  The slowdown reflects a drop in the number of Americans with private health insurance.  That fell to 195.4 million in 2008, compared with 196.4 percent in 2007.

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