National Health Spending in 2007

’ 81-’82 SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group, Department of Commerce, Bureau of Economic Analysis and National Bureau of Economic Research, Inc. Percent of GDP ’ 90-’91 Calendar Years National Health Expenditures as a Share of Gross Domestic Product, 1970-2007 ’ 73-’75 ’ 80-’80 ’ 01-’01 ’ 07- 16.2%

National Health Spending in 2007: Slower Drug Spending Contributes to Lowest Rate of Overall Growth Since 1998 Micah Hartman Anne Martin Patricia McDonnell Aaron Catlin and The National Health Expenditure Accounts Team

2007 National Health Expenditure Accounts

Trends in aggregate health spending

Prescription drug spending

Health services

Sources of funding

Growth in National Health Expenditures (NHE) and Gross Domestic Product (GDP), 1970-2007 SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group, Department of Commerce, Bureau of Economic Analysis and National Bureau of Economic Research, Inc. Percent NHE GDP ’ 90-’91 Calendar Years ’ 73-’75 ’ 80-’80 ’ 81-’82 ’ 01-’01 ’ 07-

’ 81-’82 SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group, Department of Commerce, Bureau of Economic Analysis and National Bureau of Economic Research, Inc. Percent of GDP ’ 90-’91 Calendar Years National Health Expenditures as a Share of Gross Domestic Product, 1970-2007 ’ 73-’75 ’ 80-’80 ’ 01-’01 ’ 07- 16.2%

Growth in Prescription Drug Expenditures, 1980-2007 SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 4.9%

2007 Trends in Prescription Drug Spending

Factors that influenced the drug spending trend in 2007:

Increased use of generics

Slower price growth

Increased safety concerns

The Nation’s Health Dollar, Calendar Year 2007: Where It Went NOTE: Other spending includes dentist services, other professional services, other personal, home health, durable medical products, over-the-counter medicines and sundries, public health, research and structures and equipment . SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

Growth by Service Category, 2006 and 2007 Percent NOTE: Other spending includes dentist services, other professional services, other personal, durable medical products, over-the-counter medicines and sundries, public health, research and structures and equipment . SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

The Nation’s Health Dollar, Calendar Year 2007: Where It Came From 1 Other Public includes programs such as workers’ compensation, public health activity, Department of Defense, Department of Veterans Affairs, Indian Health Service, State and local hospital subsidies and school health. 2 Other Private includes industrial in-plant, privately funded construction, and non-patient revenues, including philanthropy. NOTE: Numbers shown may not add to 100.0 because of rounding. SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

Growth in Total Medicare Spending, 1995-2007 SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 18.5% 7.2%

Growth in Medicare Fee-for-Service Spending, 1995-2007 SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. -0.8% 3.6% 4.5%

Growth in Medicare Managed Care Spending, 1995-2007 SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 23.3% 16.3% 6.0%

Growth in Total Medicaid Spending, 1995-2007 SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 6.4%

Growth in Medicare and Medicaid Spending, 1995-2007 SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 18.5% -0.7% Medicaid Medicare Both

Private Health Insurance Premium and Benefit Growth, 1995-2007 Premiums Benefits 6.0% 6.6% SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

Health Spending Growth: Households & Out-of-Pocket, and Household as a Percent of Personal Income 1 : Calendar Years 1995 -2007 Sources:Centers for Medicare & Medicaid Services, Office of the Actuary: Data from the National Health Statistics Group, 1987-2007; U.S. Department of Commerce, Bureau of Economic Analysis, August, 2008. 1 Adjustments to personal income include the addition of contributions to social insurance for Medicare, since they are included in individuals' health spending, and the exclusion of health benefit payments

Sponsors of Health Care Spending, 2005-2007 SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. , 17% , 23% , 4% , 31% , 25%

Major Findings from the 2007 National Health Expenditure Accounts

National health spending growth decelerated in 2007 to its slowest rate since 1998, or 6.1 percent.

Expenditures totaled $2.2 trillion, or $7,421 per person.

The health spending share of Gross Domestic Product was 16.2 percent in 2007.

Retail drug spending growth was the main driver of slower growth in total health spending in 2007.

Impacts of a one-time effect of the implementation of the Medicare Part D benefit are evident as growth in Medicare and Medicaid return to growth rates that are more similar to years prior to 2006.