4 Key Observations From the CMS Report on 2012 Health Spending

In 2012, healthcare spending growth remained relatively slow for the fourth consecutive year, according to a Health Affairs study conducted by national health expenditure officials with CMS.

moneyNational health spending in 2012 increased by 3.7 percent to $2.8 trillion, compared with a 3.6 percent increase to $2.7 trillion in 2011, according to the CMS analysis. Since 2009, annual growth in national health spending has remained between 3.6 percent and 3.8 percent, reflecting the lingering effects of the recent recession. Furthermore, in 2012, CMS economists found the gross domestic product (not adjusted for inflation) grew nearly 1 percentage point faster than health spending, and the share of the economy devoted to healthcare fell from 17.3 percent in 2011 to 17.2 percent in 2012.

Here are some highlights concerning hospital spending from the CMS report on healthcare expenditures in 2012.

1. Spending for hospital care went up by 4.9 percent, reaching $882.3 billion in 2012. That's a 1.5 percentage point increase compared with the 2011 spending growth rate for hospital care. According to CMS, hospital price growth accelerated slightly in 2012 to 2.5 percent from 2.1 percent in 2011. Use and intensity of services also increased in 2012.

2. Private health insurance (36 percent) and Medicare (27 percent) accounted for nearly two-thirds of payment for hospital care. Private health insurance payments grew 5.8 percent in 2012, up from 4.5 percent in 2011. Faster growth in per enrollee spending and a slight increase in the number of people covered by private insurance accounted for the acceleration, according to CMS.

3. Due to increased enrollment, Medicare spending on hospital services went up by 4.5 percent in 2012, compared with 3.6 percent the previous year. Patient Protection and Affordable Care Act provisions that reduced fee-for-service hospital payment growth partly offset the spending growth driven by increased enrollment.

4. Medicaid spending on hospital services grew 4.1 percent in 2012, up from 1.7 percent in 2011. Still, the increase was small compared to the average annual growth rate of 7.3 percent annually from 2007 to 2010. Spending growth was higher during that time period because of increased enrollment spurred by the recession, in addition to enhanced federal funding included in the American Recovery and Reinvestment Act of 2009, according to CMS economists.

More Articles on Hospital Spending:
President Obama Signs 2014 Budget Bill: What It Means for Hospitals
Is Healthcare Spending Finally Under Control?  
Report: October Healthcare Price Growth Rate Hit 50-Year Low 

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