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Government Health Spending Outpaced Insurers in U.S. for 2009

Government Health Spending Outpaced Private Insurance
A mother and her daughter are treated at a non-profit hospital in Aurora, Colorado. Photographer: John Moore/Getty Images

Jan. 5 (Bloomberg) -- U.S. government spending on Medicaid and Medicare rose almost six times faster than insurance company expenditures in 2009 from the prior year as the recession pushed more Americans onto public assistance, a federal report said.

The U.S. and states combined to spend $373.9 billion on Medicaid, the federal health program for the poor, an increase of 9 percent. Outlays for Medicare, aiding the elderly and disabled, rose 7.9 percent to $502.3 billion. Insurance companies led by UnitedHealth Group Inc. spent $801.2 billion, an increase of 1.3 percent.

The economic slowdown drove 3.5 million people onto Medicaid’s rolls in the period, said the report from the U.S. Centers for Medicare and Medicaid Services. The unemployment rate reached 10 percent and 6.2 million fewer people were enrolled in private health insurance, a 3.2 percent decline, according to the study.

“The recession that ended in June 2009 profoundly influenced total health spending,” said David Lassman, a statistician at the Centers for Medicare and Medicaid Services, at a news conference today. The government published its findings in the journal Health Affairs.

Congress is preparing to debate a fiscal 2012 budget and spending on entitlement programs. The health-care overhaul President Barack Obama signed in March would reduce the growth of spending on Medicare and Medicaid by about $455 billion in a decade, according to the Congressional Budget Office.

Total U.S. spending on health care rose to $2.49 trillion in 2009 from $2.39 trillion the prior year. Health care accounted for 17.6 percent of the gross domestic product in 2009, growing by one percentage point, which was the largest-ever single-year increase since federal auditors began tracking spending in 1960.

Though national health-care spending rose 4 percent in 2009, the smallest increase ever recorded, its share of gross domestic product increased because the economy shrank by 1.7 percent that year, the report said.

To contact the reporter on this story: Jeffrey Young in Washington at jyoung89@bloomberg.net.

To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net.

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