US Spent $1.99 trillion on Health Care in 2005, with Lowest Growth Since 1999

The U.S. health care spending increased 6.9% in 2005 to $1.988 trillion, or $6,697 per person, compared to 7.2% growth in 2004 and the lowest growth rate since 1999, according to a latest comprehensive study on health care spending by Centers for Medicare and Medicaid Services.

The slower growth reflects a sharp slowdown in the rise of prescription-drug spending, according to the report, noting that health-care spending will be dictated by factors such as the aging of the population, the development of new technology and utilization patterns by patients and doctors.

Other Highlights:

  • Health-care spending jumped to 16% of GDP in 2005 from 15.9% in 2004. 

  • Federal and state governments share was 40% ($736.3 billion) of spending for health services and supplies. 

  • Public-sector spending rose 7.8% in 2005, compared with growth of 7% for businesses and 6.2% for households.

  • Prescription-drug spending increased at a lower pace of 5.8% in 2005, down from 8.6% in 2004 and a peak of 18.2% in 1999.

  • Drug spending by Medicaid rose 2.8% in 2005, compared with average annual increases of 15.4% for the program from 1994 to 2004. 

  • Drug makers increased prices for brand-name prescription medicines an average of 6% in 2005.

  • Hospitals accounted for 31% of all dollars spent on health care.

  • Nearly 25% of out-of-pocket dollars went to pay for prescription drugs.

  • Out-of-pocket spending for health care grew to $249.4 billion in 2005, compared with $235.8 billion in 2004. 

North America posted a 6% growth retail pharmaceutical sales to $204.85 billion in the 12 months to August 2006, according to IMS data.

Read the detailed story at WSJ: Growth in U.S. Health-Care Spending Slows Again

Full Report at Health Affairs

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