U.S. healthcare spending rises 3.9% in 2010

U.S. healthcare spending grew at the second-lowest rate on record in 2010 as recession-spooked consumers avoided going to the doctor, taking expensive prescription drugs and undergoing costly elective procedures.

Public and private healthcare spending totaled $2.6 trillion, representing 17.9% of the U.S. economy, the same proportion as in 2009, according to a government report released Monday. That was a sharp departure from previous years, when healthcare consumed ever-larger shares of the economic pie.

But analysts said spending was likely to pick up as the economy improved and the healthcare law passed under President Obama begins to expand coverage to millions of people now uninsured.

Healthcare spending rose 3.8% in 2009, the smallest rise in the 51 years that the federal Centers for Medicare & Medicaid Services has been tracking the data. It rose 3.9% in 2010.


The figures reflected the “extraordinary” slow growth in consumption of medical services and products, said Anne Martin, one of the government economists who wrote the study published in the journal Health Affairs.

“Persistently high unemployment, continued loss of private health insurance coverage and increased cost sharing led some people to forgo care or seek less costly alternatives than they would have otherwise used,” the report said.

The growth in health insurance premiums, while slowing slightly in 2010, exceeded the growth in insurers’ spending on health benefits, according to the study. Insurers’ spending rose 1.6%, compared with 3.7% the year before.

The report showed that the federal government footed 29% of the nation’s healthcare bill in 2010, up from 23% in 2007. Part of that increase reflects a temporary increase in federal aid to states to enroll more uninsured people in Medicaid, which covers medical costs for the poor and disabled. The percentage of spending by private businesses and state and local governments declined.


Paul Ginsburg, president of the Center for Studying Health System Change, a Washington research group, said the report didn’t address the biggest question: “When the economy gets strong again, do we just return to the old business as usual?”

“Probably,” he said. “But there’s a chance that the experience of people economizing may have longer-lasting effects.”

Ginsburg said he believed healthcare spending remained slow last year, reflecting the lingering effects of the recession and sluggish recovery.