Largely due to the recession, health care spending grew in 2009 and 2010 at its slowest rate in five decades. What has not slowed, however, is government spending on health care: A new analysis from the McKinsey Center for U.S. Health System Reform shows that state and federal spending on health care has grown by 55 percent since 2003, nearly twice as fast as private spending growth. Two changes in health care spending, both also products of the recession, explain this trend.
First, fewer Americans have private health insurance, meaning less spent on monthly premiums. Here’s how the McKinsey report explains it:
Between 2007 and 2009, the number of people with employer-sponsored or private individual insurance fell by nearly 10 million. In 2009, the share of Americans with private insurance slipped to 64.5 percent — the lowest level in 20 years of census records — while the share receiving some form of public insurance hit a record high.
That ties into the second driver: Medicaid rolls have expanded as more Americans lose private coverage, and become eligible for the government health-care program that covers low-income individuals. Medicaid has seen huge enrollment gains and, as this chart from the Center for Medicare and Medicaid Services shows, that’s been especially true since 2008:
The overall health care spending slowdown actually masks two divergent trends — one, private health care spending accounts for an increasingly smaller chunk of the $2.6 trillion that the United States spends on health care, and two, government programs foot a larger part of the tab.