Americans Cut Back on Health Care During Recession

Americans Cut Back on Health Care During Recession

January 10th, 2012 // 1:22 pm @ jmpickett

In 2009 and 2010 total health care spending grew at just under 4 percent, at the slowest rate since the government began keeping records over fifty years ago, one big reason is that Americans dramatically curtailed their use of physician and hospital services.

“This certainly was a very deep and significant recession,” said Stephen Heffler, director of the National health Statistics Group at the Centers for Medicare and Medicaid. “The impact that it had on use is certainly bigger than we’ve seen in the past.”

Total health care spending in 2010 reached $2.6 trillion, or an average of $8400 per person. The total amounts to 17.9 percent of GDP [cnbc explains] , unchanged from 2009. But a spending increase of 3.9 percent from 2009 marks a dramatic deceleration from earlier in the decade when spending grew nearly twice as fast — an average of 7.6 percent annually, according the latest National Health Expenditures report.

Government economists say spending on health care premiums grew faster than spending on benefits for the first time in seven years. As private companies continued to shift more of the cost of care to employees, they in turn cut back on seeing the doctor and choosing elective procedures, in order to save money.

“Benefits grew at the slowest rate in the history of the national health account,” explained CMS economist Ann Martin, who helped compile the report, “primarily, due to the slowdown in use of services.”

Spending on prescription drugs also slowed remarkably, up just 1.2 percent from 2009, in part due to lower demand for prescription medicines, but also lower costs due to greater adoption of generic medications over brand-name drugs.

In 2012, with the expiration of the patent on Pfizer’s [PFE 21.82 0.25 (+1.16%) ] $10 billion blockbuster drug Lipitor, prescription spending trends may well continue to be lower.

The big question is whether Americans will continue to be as cautious about spending on medical services once the economy recovers.

“Typically, when economic growth is rebounded, we’ve seen health spending growth rebound,” said CMS’ Stephen Heffler. “But that is just a historical perspective.”