A report by the Centers for Medicare & Medicaid Services (CMS) indicates that growth in health expenditures is expected to slow in 2009 as a result of the recession.

Last year's growth in national health expenditures was 6.1%, as health spending increased from $2.2 trillion to $2.4 trillion, while growth in the economy, as measured by the gross domestic product (GDP), was 3.5%. 

For 2009, health spending is projected to increase 5.5%, while GDP is expected to decrease 0.2%. 

The health share of GDP increased from 16.2% in 2007 to 16.6% in 2008 and is expected to go up to 17.6% in 2009.

Private health spending growth decelerated from 5.8% in 2007 to 5.3% in 2008.  It is projected to reach a 15-year low of 3.9% in 2009, driven by expected slower income growth and a decline in the number of people covered by private health insurance.

As a result of faster growth in Medicaid enrollment and expenditures, public spending growth on health care accelerated from 6.4% in 2007 to 7.0% in 2008.  It is projected to be 7.4% in 2009.

Hospital spending growth edged downward from 7.3% in 2007 to 7.2% in 2008.  It may decelerate further in 2009 to 5.7%. 

Prescription drug spending growth slowed to 3.5% in 2008, down from 4.9% in 2007, as many consumers filled fewer prescriptions or switched to lower-cost generic drugs.  Prescription drug spending growth is expected to rebound to 4.0% in 2009, as projected double-digit accelerations in Medicare and Medicaid growth more than offset a continuing recession-related deceleration in private prescription drug spending growth.

Within Medicare, prescription drugs are projected to be the fastest growing component of the program's spending over the projection period, with the prescription drug share of Medicare spending increasing from 10.9% in 2007 to 14.7% by 2018.

Physician and clinical services grew 6.2% in 2008, compared with the 6.5% growth in 2007.  In 2009, physician and clinical spending is projected to grow at 6%.

In 2010, growth in national health expenditures is projected to decelerate to 4.6%, down from 5.5% in 2009.  This trend is largely attributable to a scheduled decline in Medicare spending growth (8.0% in 2009 to 2.5% in 2010), due to a 21% cut in physician payment rates required in 2010 under current law. However, in every year since 2002, Congress has acted to override the reduction in physician payments. 

If Medicare physician payment rates are not cut in 2010 and remain at 2009 levels, projected Medicare spending growth in 2010 would be 6.4%.  And projected total growth in national health expenditures would be 5.4% in 2010.

Medicaid spending growth is expected to slow from 9.6% in 2009 to 7.8% in 2012 due to projected improving economic conditions.  However, as the relatively expensive aged and disabled eligibility groups comprise a larger share of total Medicaid enrollment through 2018, spending growth is expected to accelerate to 8.9% by the end of the coming decade.

Complete data can be found on the CMS Web site at http://www.cms.hhs.gov/NationalHealthExpendData/03_NationalHealthAccountsProjected.asp.