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Recession slows dental spending

First annual decline in 50 years

Washington—Patients spent less out-of-pocket and dental spending declined slightly in 2009, the first year-to-year decline since government analysts began tracking the National Health Expenditure Accounts in 1960. Dental spending per capita also declined.

The economic recession that officially ended in June 2009 "profoundly influenced" health care spending during the year, according to a report prepared by the Centers for Medicare & Medicaid Services Office of the Actuary National Health Accounts and described in the journal Health Affairs.

Government analysts said a slower rate of growth in consumer out-of-pocket spending for health care compared to 2008 "was due mainly to declines in out-of-pocket spending for dental services, services provided by nursing care facilities, and physician and clinical services, sectors that account for a relatively large share of out-of-pocket spending.

"These declines were largely the result of decreased use, as consumers delayed getting medical care because of recession-related drops in household income and loss of health insurance. Cost-sharing was reported to have increased in 2009 as employers responded to the economic downturn. However, this increase was partially offset by reduced household income, which caused people to be more cautious in their spending."

Overall health spending grew by 4 percent, albeit at the slowest rate of growth in 50 years, and grabbed an increasing share of the gross domestic product as health spending continued to outpace the general economy.

The declines in dental spending and in out-of-pocket spending for dental services from 2008 to 2009 were the first reported since the NHEA began tracking health spending 50 years ago. Dental spending increased inexorably and annually from just under $2 billion in 1960 to $102,273,600,000 in 2008 but declined by 0.1 percent in 2009 to $102,221,900,000. Out-of-pocket spending for dental services grew apace but fell from $44.9 billion in 2008 to $42.5 billion in 2009, a 5.5 percent decline.

Health insurance, private and public, paid $59.3 billion of the nation's dental bill in 2009 and other third-party payers and programs, primarily state and local general assistance and Indian Health Services, covered nearly $500 million.

Private sector insurers spent $50 billion on dental services or 6.2 percent of the private health insurance benefits for personal health care expenditures in 2009. However, the recession led to slower growth in private health insurance expenditures and impacted household, government and provider investments in the health care economy as well, the government analysts said. Providers reduced their spending for capital investments by 2.7 percent in 2009.

On the public side of the dental ledger, federal and state Medicaid and state Children's Health Insurance Programs spent $7.9 billion, the Department of Defense $1 billion, Medicare $290 million and the Department of Veterans Affairs $77 million.

Health care spending totaled $2.5 trillion in 2009 or $8,086 per person. This includes $332 per person for dental services, a decline from $336 in 2008, said Joseph Benson, dental analyst for the 2009 NHEA.

"The economic recession that began in December 2007 and ended in June 2009 was the longest of all recessions since World War II," the NHEA team said. "The health care sector felt its effects more quickly than was the case in past recessions, leading total national health spending in 2009 to grow at a historically low rate.

"Although the recession contributed greatly to slower health spending growth, the burden of financing health spending increased for households, businesses and governments as the resources available to pay for that care declined. By the end of 2009, the United States was devoting just over one-sixth of its available financial resources to its health care system, a system that in 2010 embarked on an ambitious reform aimed at expanding coverage, improving health outcomes and slowing spending growth," the CMS authors concluded.

The Business Cycle Dating Committee of the National Bureau of Economic Research determined that the recession ended and a recovery began in June 2009.

Image: Health Expenses chart