Are you sure?

US health spending hits $2.2 trillion in 2007

Americans spent $2.2 trillion on healthcare in 2007, or $7,421 per person, according to a US government report.

The 6.1% rate of growth over 2006 was the lowest since 1998, mostly because growth in spending on drugs slowed, the team at the Centers for Medicare and Medicaid Services found.

Cheaper generic drugs and worries about drug safety helped slow spending growth but the numbers kept the United States far ahead of all other countries on health spending.

Health spending represented 16.2% of US gross domestic product, up slightly from 16% in 2006, the researchers reported in the journal Health Affairs.

“Slower spending growth for prescription drugs was one of the major factors driving down overall healthcare spending growth in 2007,” Micah Hartman, a statistician at CMS who worked on the report, told reporters in a telephone briefing.

“In 2007, retail prescription drug spending increased 4.9% to $227.5 billion; this was a deceleration from 8.6% growth in 2006,” the CMS team wrote.

Some of this loss hit drug companies.

Sanofi sleeping pill Ambien, Coreg, a heart failure drug made GlaxoSmithKline and Pfizer Inc's blood pressure drug Norvasc all lost patent exclusivity in 2006, making room for less expensive generics.

Generic drugs, which cost 30% to 80% less than brand names, accounted for 67% of the market, up from 63% in 2006.

“Increased safety concerns for certain prescription drugs in 2007 also likely influenced the drug spending trend, as the Food and Drug Administration issued 68 'black box' warnings, compared to 58 in 2006 and 21 in 2003,” they wrote.

Hartman said his team presumed there must be a link between these black box warnings - the strongest type of safety warning for prescription drugs - and the decline in drug use.

Medicare, the federal health insurance plan for the elderly, spent 19% more on retail prescription drugs.

In 2007, 31% of healthcare dollars went to hospitals, 21% to physicians and clinics, 10% to drugs and 25% to other services such as dental and home health services.

Private insurance paid for 35% of this, Medicare footed the bill for 19%, Medicaid and the State Children's Health Insurance Program paid for 15%, and 12% came from out of pocket. Other sources included Department of Defense spending and philanthropy.

Hospital spending was $696.5 billion, a 7.3% increase, while doctor and clinical services spending was $478.8 billion, up 6.5%.

Medicare spent $431.2 billion overall in 2007, up 7.2%, while spending for Medicaid, the joint state-federal health plan for the poor and disabled, grew 6% to $329.4 billion. Much of the growth in Medicaid spending was in payments to hospitals, the report found.

“Private health insurance premiums increased 6% to $775 billion in 2007,” the report reads.

People spent $268.6 billion out of their own pockets for healthcare, up 5.3% from the year before.

Numbers could change this year, Hartman said, noting the recession that began in December 2007. “This recession is already longer than any recession we have seen in the past 20 years,” he said. (Reuters)