National Health Spending in 2011: Overall Growth Remains Low But Some Payers and Services Show Signs of Acceleration

1. National Health Spending in 2011: Overall Growth Remains Low But Some Payers and Services Show Signs of Acceleration Micah Hartman Anne Martin Joseph Benson Aaron Catlin and The National Health Expenditure Accounts Team

2. 2011 National Health Expenditure Accounts: Highlights National health spending increased 3.9 percent in 2011, the same rate of growth as in 2009 and 2010 National health spending reached $2.7 trillion, or $8,680 per person in 2011 The share of Gross Domestic Product (GDP) devoted to health care spending remained steady from 2009 through 2011 at 17.9 percent SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

3. 2011 National Health Expenditure Accounts: Highlights Personal health care (PHC) spending increased 4.1 percent in 2011—a slight acceleration from growth of 3.7 percent in 2010 Growth in non-price factors such as the use & intensity of health care goods and services increased in 2011 Spending for retail prescription drugs, physician and clinic’s services grew at a quicker pace in 2011 Medicare, private health insurance, and consumer out-of-pocket spending growth picked up in 2011 SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

4. Affordable Care Act Affordable Care Act provisions effective in 2010 and 2011 had minimal impact on overall growth Sector and payer specific impacts include: Private health insurance Under twenty-six provision Medical Loss Ratio Retail Prescription Drugs Part D coverage gap Medicaid retail prescription drug rebates Medicare Program Payment rate updates Preventative services SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

5. Recessionary Impact on National Health Expenditures2008-2010 2008- Slowdown from growth of 6.2 (2007) to 4.7 (2008) Private health insurance enrollment, other private revenues, out-of-pocket spending growth slowed or declined 2009- Slowdown from growth of 4.7 (2008) to 3.9 (2009) Decline in structures and equipment investment, private health insurance enrollment, and slower growth in out-of-pocket spending 2010- Flat from growth of 3.9 (2009) to 3.9 (2010) Historically low growth in personal health care goods and services (3.7) due in part to decline in use and intensity SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

6. Growth in National Health Expenditures and Gross Domestic Product (GDP), 1985-2011 March 2001- November 2001 Recession December 2007-June 2009 Recession July 1990- March 1991 Recession Annual Percent change Calendar Years SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group, U.S Department of Commerce, Bureau of Economic Analysis and National Bureau of Economic Research, Inc.

7. National Health Expenditures as a Share of Gross Domestic Product, 1985-2011 17.9% December 2007 - June 2009 Recession March 2001- November 2001 Recession July 1990- March 1991 Recession Percent of GDP Calendar Years SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group, Department of Commerce, Bureau of Analysis and National Bureau of Economic Research, Inc.

8. Factors Accounting for Growth in Per Capita National Health Expenditures and Personal Health Care, Selected Calendar Years 2004-2011

9. The Nation’s Health Dollar ($2.7 Trillion), Calendar Year 2011: Where It Went 1 Includes Research (2%) and Structures and Equipment (4%). 2Includes Durable (1%) and Non-durable (2%) goods. 3 Includes expenditures for residential care facilities, ambulance providers, medical care delivered in non-traditional settings (such as community centers, senior citizens centers, schools, and military field stations), and expenditures for Home and Community-based Waiver programs under Medicaid. Note: Sum of pieces may not equal 100% due to rounding. SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 9

10. Annual Growth in Spending by Type of Service, 2010 and 2011 1Includes Continuing Care Retirement Communities 2 Includes Durable Medical Equipment and Other Non-Durable Medical Products 10 SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

11. Hospital Spending, Annual Growth, 2000 - 2011 $850.6 billion in 2011 Slower Growth in 2011 A slowdown in price growth and low growth in utilization Slower growth in Medicaid Acceleration in Private Health Insurance and Medicare SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

12. Physician and Clinical Services Spending, Annual Growth, 2000 - 2011 • $541.4 billion in 2011 • Acceleration in 2011 • Increase in growth in use and intensity of services; slower growth in prices • Clinical services’ spending increasing faster than physician services’ spending • Acceleration in Private Health Insurance and Medicare SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 12

13. Retail Prescription Drugs Spending, Annual Growth, 2000- 2011 • $263.0 billion in 2011 • Faster growth in 2011 • Brand name and specialty drug price accelerated • Increased spending on new brands SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 13

14. The Nation’s Health Dollar, Calendar Year 2011: Where It Came From 1 Includes worksite health care, other private revenues, Indian Health Service, workers’ compensation, general assistance, maternal and child health, vocational rehabilitation, Substance Abuse and Mental Health Services Administration, school health, and other federal and state local programs. 2Includes co-payments, deductibles, and any amounts not covered by health insurance. Note: Sum of pieces may not equal 100% due to rounding. SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 14

15. Annual Growth in Spending by Source of Funds, 2010 and 2011 National Health Expenditures Out-of-pocket Health Insurance Private Health Insurance Medicare Medicaid (Title XIX) Total CHIP (Title XIX and Title XXI) Department of Defense Department of Veterans Affairs Other Third Party Payers & Programs SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 15

16. Private Health Insurance: Growth in Enrollment, Premiums, and Benefits, 2007 – 2011 SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 16

17. Medicare: Growth in FFS and Medicare Advantage Expenditures and Enrollment, 2007 – 2011 SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 17

18. Medicaid: Growth in Enrollment and Total, Federal, and State & Local Expenditures, 2007 – 2011 SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group.

19. Out-of-Pocket Expenditures SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 19

20. Distribution and Annual Growth by Type of Sponsor Note: Sum of pieces may not equal 100% due to rounding. SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group; 20

21. 2011 National Health Expenditure Accounts:Summary • National Health Expenditures reached $2.7 trillion, or $8,680 per person in 2011 • National Health Expenditures increased 3.9 percent in 2011 • National Health Expenditures represented a 17.9 percent share of Gross Domestic Product (GDP) for the third consecutive year • Spending grew faster in 2011 for: • Retail prescription drugs (2.9 percent) • Physician and clinical services (4.3 percent) • Medicare (6.2 percent) • Private health insurance (3.8 percent) • Out-of-pocket (2.8 percent)   • Spending grew at a slower rate in 2011 for: • Hospital services (4.3 percent) • Medicaid (2.5 percent) • Sponsors of Health Care (% share in 2011) • Federal government (28 percent) • Households (28 percent) • Private businesses (21 percent) • State and local government (17 percent) SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. 21