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January/February 2007
Health Care Spending
Health care spending in the U.S. increased 6.9% in 2005, according to an annual government report published in the Jan./Feb. issue of Health Affairs. Compared with previous years, however, the growth rate declined for the third consecutive year. The growth rate was the lowest reported since 1999.
According to the report, the U.S. spent $1.988 trillion, or $6,697 on average per person, on health care in 2005. State and federal governments paid about 40% of health care costs, totaling $736.3 billion.
Prepared by the CMS Office of the Actuary, the report states that the declining growth rate "might be an encouraging sign for the individuals, businesses and governments that finance health care; however, it is unclear whether this ... is temporary or indicative of a long-term trend."
Though the rate of growth in health spending slowed, it continued to rise more quickly than wages, general inflation, and the economy as a whole. Health spending accounted for 16% of the gross domestic product in 2005, up from 15.9% the previous year.
Public-sector spending on health care increased 7.8% in 2005, compared with a 7% growth rate for businesses and a 6.2% increase for households, according to the report.