National healthcare spending rises in 2000 - In the News - Brief Article

Healthcare Financial Management, Feb, 2002

U.S. healthcare spending rose to $1.3 trillion in 2000, a 6.9 percent increase over the previous year, according to the Centers for Medicare and Medicaid Services (CMS). The increase for 2000 compared with a 5.7 percent growth rate in 1999 and was the highest annual increase recorded since 1993, when spending rose by 7.4 percent. CMS economists said the increase primarily reflected a rise in economywide inflation. Healthcare spending averaged $4,637 per person in 2000, compared with $4,377 in 1999.

Spending for prescription drugs once again led in the pace of growth in 2000, although at a slower rate than recent years. Drug spending increased by 17.3 percent to $121.8 billion in 2000, compared with a 19.2 percent increase to $103.9 billion in 1999.

Hospital spending rose to $412 billion in 2000, up 5.1 percent from 1999. Nursing home expenditures, which had been declining since 1995, rose by 3.3 percent in 2000. Spending for freestanding home health services rose by 0.3 percent in 2000, after five years of declining growth and actual declines in 1998 and 1999.

Spending for Medicare was $224 billion in 2000, a 5.6 percent increase. Medicare accounted for 38 percent of public spending on health care and 17 percent of overall health spending. Increases in Medicare spending were attributed largely to changes in provider payments, including those enacted in the Balanced Budget Refinement Act of 1999.

Federal and state spending for Medicaid totaled almost $202 billion in 2000, up 8.3 percent from 1999. Federal and state spending for the State Children's Health Insurance Program was $2.8 billion in 2000, up 55 percent from 1999.

The growth in expenditures in 1999 and 2000 slightly outpaced growth in gross domestic product (GDP). The share of GDP spent on health care rose from 13.1 percent in 1999 to 13.2 percent in 2000.