Healthcare spending rose 4% in 2009 to $2.49 trillion ($8,086 per person), or 17.6% of the American economy, the smallest percentage rise in nearly fifty years, according to a report in Health Affairs. However, the increase occurred while the overall economy shrank by 1.7% and federal Medicaid spending went up. The recession resulted in considerable out-of-pocket healthcare spending as well as cutbacks on expansion plans by hospital and medical groups.

In 2008, healthcare spending represented 16.6% of the US economy; a full percentage point less than in 2009.

Spending on the federal-state health insurance program for those on low incomes – Medicaid – increased by almost 22% in 2009.

The authors wrote that health spending growth continues to outpace overall economic growth, which in 2009 experienced its largest fall since 1938. Fewer financial resources were available to pay for health care, the authors wrote, because of the burdens the recession placed on households, businesses and governments. Falling tax revenues combined with strong growth in federal health spending raised the health spending share of total federal revenue to 54.2% in 2009, compared to 37.6% in 2008.

With an annual federal budget deficit of over $1 trillion, many economists say the increases in health spending are unsustainable.

Many states which were strapped for cash had to significantly reduce their Medicaid spending last year, and relied on federal support to absorb the impact of the increase in the rolls. With 16 million additional people expected to be added to the Medicaid program in 2014, financial concerns are beginning to mount.

According to the Wall Street Journal, some states, including Texas are beginning to discuss pulling out of Medicaid altogether – an unlikely occurrence, many believe.

A significant number of people decreased their use of health care services and goods, mainly due to a drop in household income and the loss of employer-based private health cover. It has become progressively more common for individuals to forgo health care services because they simply cannot afford them.

Visits to doctors’ and dentists’ offices have dropped, as have the total number of hospital admissions.

None of the data reflects the impact of Obama’s new health care law, which was signed in March 2010, federal officials stressed.

There was a 3.2 drop in the number of people with private health insurance in 2009.

Retail prescription sales, on the other hand, rose more rapidly in 2009 than in 2008. 10% of all dollars spent on health care are spent on retail prescription medications.

“Recession Contributes To Slowest Annual Rate Of Increase In Health Spending In Five Decades”
Anne Martin, David Lassman, Lekha Whittle, Aaron Catlin and the National Health Expenditure Accounts Team
Health Affairs January 2011 vol. 30 no. 1 11-22
doi: 10.1377/hlthaff.2010.1032

Written by Christian Nordqvist