WASHINGTON – Growth in national health expenditures may have increased faster last year than the growth in the Gross Domestic Product, according to the Centers for Medicare & Medicaid Services.

According to CMS, the NHE is projected to have reached $2.5 trillion and grown 5.7 percent in 2009, up from 4.4 percent in 2008, while the GDP – with the economy still in recession – is anticipated to have declined 1.1 percent.

The projected acceleration in growth for 2009 was due in part to faster spending growth for the Medicaid program (9.9 percent, up from 4.7 percent in 2008), reflecting increased growth in enrollment associated with the recession, CMS officials said.

Also to blame is growth in the use of healthcare services, particularly in treatment for the H1N1 virus, and an expected increase in coverage provided through the Consolidated Omnibus Budget Reconciliation Act (COBRA) in response to the government's subsidization of COBRA premiums.

As a result of NHE growth outpacing GDP growth in 2009, the health share of the GDP is expected to have increased from 16.2 percent of the GDP in 2008 to 17.3 percent in 2009, which would represent the largest one-year increase in history.

In 2010, NHE growth is expected to decelerate to 3.9 percent, while the GDP is anticipated to rebound to 4 percent growth. Much of the projected slowdown in NHE growth is attributable to a deceleration in Medicare spending growth (1.5 percent in 2010, from 8.1 percent in 2009) that is driven by a 21.3 percent reduction in Medicare physician payment rates called for under the current law’s sustainable growth rate (SGR) provisions.

Under a scenario where the SGR provisions of law are revised and physician payment rates are held at 2009 levels, the CMS says total health spending is projected to grow 4.7 percent – 0.8 percentage points faster than under current law – and total Medicare spending is projected to grow 5.1 percent.

Private spending in 2010 is projected to grow just 2.8 percent, which is related to both declining private health insurance enrollment because of sustained high rates of unemployment and the expiration of federal subsidies associated with COBRA coverage.

Over the projection period (2009-2019), average annual health spending growth (6.1 percent) is anticipated to outpace average annual growth in the overall economy (4.4 percent). By 2019, national health spending is expected to reach $4.5 trillion and comprise 19.3 percent of the GDP.

Public spending is projected to grow faster on average than private spending (7 percent versus 5.2 percent, respectively) for 2009 through 2019. As a result of more rapid growth in public spending, the public share of total healthcare spending is expected to top 47 percent in 2008, exceed 50 percent by 2012 and reach 52 percent by 2019.

Other findings include:

• Medicare spending ($507.1 billion) is projected to have increased 8.1 percent in 2009, down from 8.6 percent in 2008, partly due to slower growth in hospital spending.
• Medicaid spending ($378.3 billion) is projected to have increased 9.9 percent in 2009, up from 4.7 percent in 2008, due largely to rapidly increasing Medicaid enrollment during the recession.
• From 2009 through 2019, Medicare and Medicaid spending growth rates are projected to average 6.9 percent and 7.5 percent, respectively.
• Spending on private health insurance premiums ($808.7 billion) is projected to have increased 3.3 percent in 2009, up from 3.1 percent in 2008.
• Growth in out-of-pocket spending is expected to have slowed from 2.8 percent in 2008 to 2.1 percent in 2009 and to have reached $283.5 billion. Between 2009 and 2019, out-of-pocket spending growth is projected to average 4.8 percent.
• Hospital spending growth is expected to have increased 5.9 percent in 2009, up from 4.5 percent in 2008, and to have reached $760.6 billion.
• Physician and clinical services spending growth is expected to have increased 6.3 percent in 2009, up from 5 percent in 2008, and to have reached $527.6 billion.
• Prescription drug spending growth is expected to have increased 5.2 percent in 2009, up from 3.2 percent in 2008, and to have reached $246.3 billion.