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catlin%20Health%20Affairs%202008 - Health Sp endi ng...

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National Health Spending In 2006: A Year Of Change For Prescription Drugs The rate of prescription drug spending increased for the first time in several years, and Medicare Part D caused some major shifts in the payer landscape. by Aaron Catlin, Cathy Cowan, Micah Hartman, Stephen Heffler, and the National Health Expenditure Accounts Team ABSTRACT: In 2006, U.S. health care spending increased 6.7 percent to $2.1 trillion, or $7,026 per person. The health care portion of gross domestic product (GDP) was 16.0 per- cent, slightly higher than in 2005. Prescription drug spending growth accelerated in 2006 to 8.5 percent, partly as a result of Medicare Part D’s impact. Most of the other major health care services and public payers experienced slower growth in 2006 than in prior years. The implementation of Medicare Part D caused a major shift in the distribution of payers for prescription drugs, as Medicare played a larger role in drug purchases than it had before. [ Health Affairs 27, no. 1 (2008): 14–29; 10.1377/hlthaff.27.1.14] H ealth care spending in the united states grew 6.7 percent to $2.1 trillion, or $7,026 per person, in 2006 (Exhibits 1 and 2). This rate of growth was slightly faster than the 6.5 percent rate in 2005, which marked the slowest growth since 1999. Health spending accounted for 16.0 per- cent of gross domestic product (GDP) in 2006. This share has remained relatively stable since 2003 as a result of slower health spending growth (which peaked in 2002 at 9.1 percent) and relatively strong U.S. economic growth, which has in- creased more than 6 percent each year since 2004. In 2006, health spending growth outpaced nominal GDP growth by 0.6 percentage point. This paper presents a comprehensive view of national health spending through 2006. Spending trends are disaggregated by type of service, source of funds, and sponsor; the analysis focuses primarily on the most recent years. In 2006, several important findings emerged. First, after six consecutive years of slowing growth, prescription drug spending growth accelerated in 2006. At the same time, imple- 1 4 J a n u a r y / F e b r u a r y 2 0 0 8 H e a l t h S p e n d i n g DOI 10.1377/hlthaff.27.1.14 ©2008 Project HOPE–The People-to-People Health Foundation, Inc. Aaron Catlin and his coauthors are with the National Health Statistics Group in the CMS Office of the Actuary. Catlin ([email protected]) is an economist. Cathy Cowan also is an economist; Micah Hartman is a statistician; and Stephen Heffler is the group’s director. The other members of the National Health Expenditure Accounts Team are acknowledged at the end of the paper.
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mentation of Medicare Part D caused major shifts in the sources of funds used to pay for drugs. Additionally, these shifts and the movement toward greater enroll- ment in Medicare managed care plans caused the growth in Medicare’s adminis- trative and net cost of insurance to accelerate. Beyond these factors, a broadly based slowdown across most of the major health care services and public payers more than offset a slight acceleration in spending growth from private payers. The
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