HealthCare Spending Growth Slows To 6.1%; Now Accounts For 16.2% Of Nation's GDP

January 6, 2009 10:24 a.m. EST

Washington, D.C. (AHN) - Although health care spending in 2007 slowed to its lowest rate of increase since 1998, at a 6.1 percent increase, health care spending still outpaced overall economic growth of 4.8 percent and now accounts for 16.2 percent of the nation's gross domestic product.

Gross domestic product is the output of goods and services produced by a country and is one of the measures of national income. Most of the America's gross domestic product comes from services, such as medical care, rather than from manufacturing actual products, which are now mostly imported into America from other nations. Consumer spending accounts for about 70 percent of the America's national economy.

According to figures released Tuesday by the U.S. Centers for Medicare and Medicaid Services, health care spending in the United States rose to $2.2 trillion in 2007, or $7,421 per person.

The slower growth in health care spending was attributed to the increased use of generic drugs, which are cheaper, and also to slower growth in Medicare spending.

According to the report in 2007, 31 percent of health care dollars went to hospitals, 25 percent to "other," 21 percent to physicians and clinics, 10 percent to drugs, 7 percent to administrative costs and 6 percent to nursing homes.