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Rising Health Care Spending Slows

WASHINGTON - A decades-long boom in spending on doctors, hospitals and drugs slowed to its lowest level in 2008, even as health care costs accounted for a greater share of the nation's economy, the federal government said in a report released today.

Health care spending rose 4.4 percent in 2008 to $2.3 trillion, or $7,681 per person - the smallest increase since the spending was first tracked in 1960, according to the Centers for Medicare and Medicaid Services. The report suggests the down economy forced Americans to go without care.

"During periods of recession we often see health care spending to be somewhat insulated," said Micah Hartman, a co-author of the report. "But in 2008, we saw a bit more of an immediate impact" because the decline has been so severe.

President Obama cites costs as a major reason to revamp the health care system. Lawmakers this month will begin marrying separate health care bills approved last year by the House and Senate.

The report, which also shows private insurance premiums rose 3.1 percent in 2008, provided ammunition to both sides of the debate. "I agree we need reform," said Rep. Dave Camp, R-Mich., "but both the House and Senate Democrat bills make the problem worse by increasing the cost of health care."

Sen. Max Baucus, D-Mont., an architect of the Senate health bill, said the report shows costs are rising as wages decline. "Health reform is not only about ensuring health care security for more Americans, it is also about ensuring economic security," he said.

Other findings:

- Health care spending outpaced the 2.6 percent growth in the overall economy, accounting for 16.2 percent of the gross domestic product compared with 15.9 percent in 2007. It was 13.6 percent in 2000.

- Medicare spending grew 8.6 percent, an increase over the 7.1 percent growth posted in 2007. The report blames the increase partly on expanded enrollment in Medicare Advantage. Those Medicare plans, which are run by private insurance companies, are slated for cuts in the health care bills.

The current recession, which officially began in December 2007, may have had more of an impact on health care spending than past economic downturns in part because of the credit freeze, said Paul Ginsburg, an economist with the Center for Studying Health System Change.

"These days a lot of people with private health insurance have significant out-of-pocket costs," he said. "People didn't have access to a credit card or a loan if they had to pay a $2,000 deductible."

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