Health spending in the United States grew 6.1 percent in 2007, to $2.2 trillion or $7,421 per person. This was the slowest rate of growth since 1998 and 0.6 of a percentage point lower than the growth of 6.7 percent in 2006, according to a report by the Centers for Medicare & Medicaid Services. Healthcare spending, however, continues to outpace overall economic growth, which grew by 4.8 percent in 2007.
The slower growth in 2007 was attributed mostly to slower growth in both retail prescription drug spending and Medicare spending associated with administering Medicare benefits. Retail prescription drug spending grew 4.9 percent in 2007, slower than the 8.6 percent growth in 2006. The deceleration in 2007 was the result of several factors, including sustained growth in the generic dispensing rate, slower growth in prescription drug prices, and growing consumer concerns for drug safety.
Spending for most other healthcare services grew at about the same rate or faster than in 2006. Hospital spending, which accounts for about 30 percent of total healthcare spending, grew 7.3 percent in 2007, compared to 6.9 percent in 2006. The 2007 increase was partially driven by strong growth in Medicaid spending. In contrast, Medicare spending growth for hospital services remained stable at 4.6 percent, reflecting slower growth in fee-for-service inpatient and outpatient use, balanced by strong growth in Medicare managed care hospital spending due to an increase in the number of beneficiaries enrolling in Medicare Advantage plans.
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