The growth in healthcare spending in the U.S. slowed for the second straight year in 2004, according to a report by CMS published in the January/February issue of Health Affairs. Healthcare spending in 2004 rose 7.9%, in contrast to 8.2% in 2003, and 9.1% in 2002, due in part to slower growth in prescription drug sales. Hospital spending accounted for 28% of the growth in personal health spending between 1997 and 2000 and increased to 38% during the years 2002 to 2004. Spending for physician services accounted for 29% of the total growth in personal health spending in 2004, up from an average of 25% in 2000 to 2002. A shift toward generic and over-the-counter drugs accounted for the slower growth in spending on retail prescription drugs. Private health insurance premium growth per enrollee of 8.4% in 2004 also lagged behind the 2002 growth of 11.5% and 2003’s 10.4%.
The share of the nation’s gross domestic product (GDP) spent on health care grew 0.1% to 16% in 2004, a smaller increase in the share of GDP than in recent years as economic growth in 2004 grew at its fastest rate since 1989.
