U.S. healthcare spending drops for first time ever

Non-adjusted spending on hospitals, physicians and pharmaceuticals increased at just a 2.7 percent annual rate during the first half of 2010, according to an examination of data conducted by USA Today. That's the lowest rate of medical inflation since the federal government began tracking such data in 1959.

Once inflation is factored in, spending per person actually dropped 0.2 percent--the first time that adjusted healthcare spending has ever experienced a reduction.

Hospital spending actual took a steeper drop--1.1 percent--according to data compiled by the American Hospital Association.

Economists attribute the decreases to the weak economy, which has prompted patients--even those with insurance--to forgo some medical care.

The recession has also forced many patients who once held job-based coverage to government programs such as Medicaid, which reimburse providers at lower rates, noted Robert Brook, an economist with the Heritage Foundation.

Indeed, Medicare and Medicaid paid for 46.1 percent of the nation's healthcare during the second quarter of 2010, up from 42.3 percent in late 2007, when the recession began.

The spending trend is stark compared to the 2001 recession, when healthcare spending rose unabated.

To learn more:
-read the USA Today article
-here's the Kaiser Health News article