Publication

Health Care Costs 101

Katherine B. Wilson

In 2008, national health care spending grew at the slowest pace seen in almost 50 years. The 4.4% increase over prior year spending extended a slowing trend that has been underway since 2003. However, with the nation in the grip of recession, 2008's modest growth in health spending still outpaced the economy, and health care’s share of GDP rose to 16.2%. Total health care spending in 2008 reached $ 2.3 trillion, or $7,681 per person.

Health Care Costs 101, now published as part of CHCF's California Health Care Almanac, provides general background on U.S. health spending. It details how much we spend, on which services, and what proportion is paid directly by consumers.

Highlights include:

• Health spending grew 4.4% in 2008, the smallest annual increase on record.
• Prescription drug spending grew 3.2%, an all-time low, and the smallest increase of any health care goods and services category.
• Projections indicate that the recession-driven contraction in the economy, coupled with a modest increase in health spending, will raise health care's share of the economy for 2009 to 17.3%, a record increase over 2008's 16.2%.
• Spending for health care is shared broadly throughout the economy, constituting some 6% of personal income, 8% of total compensation paid by private business, 36% of federal government revenues, and 24% of state and local government revenues.

The 2010 edition of this report is based on 2008 national data, the latest information on health spending available from the U.S. Department of Health and Human Services, Centers for Medicare and Medicaid Services (CMS) Office of the Actuary. Projections do not include the impact of the recently enacted federal health reform law. Data on health spending for California are updated as they become available. The most current full update for California is the 2006 edition.

The complete report, as well as quick reference guides to the national and California data highlights, is available under Document Downloads. Also available are past editions.