US health spending growth continues to slow

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A new report by CMS finds that US health care spending grew only 6.1% in 2007, the slowest rate since 1998. However even that slower growth brought it up to 16.2% of the total economy, which grew 4.8% in 2007. Lower prescription drug spending and government administration were credited for the slowdown in spending; most other categories of spending grew at the same rate or faster than in 2006. Prescription drug spending grew only 4.9% in 2007, the lowest rate in 45 years. Use of generics rose to 67% in 2007 from 60% in 2005. In 2007, Medicare spending grew by 7.2%, Medicaid by 6.4%, and private health insurance by 6.0%. Consumer out-of-pocket spending grew by 5.3%, up from 3.3% in 2006. The increase was attributed to prescriptions, nursing homes and nondurable medical supplies. Out-of-pocket spending accounts for 12% of all US health care spending, down from 14.7% in 1998. In 2007, households paid 31% of all spending on health care, businesses paid 25%, and government paid 40%. Of government health care spending, including Medicare, Medicaid and employee health coverage, 57% was paid by the federal government and 42% was paid by state and local governments. It is expected that drug spending will continue to fall. Consumers are cutting back on prescriptions causing economic worries for drug companies.
Ellen Andrews