Total U.S. health-care spending rose just 3.7 percent in 2012, decreasing as a share of the economy for the second consecutive year. In fact, health-care costs grew more slowly each year from 2009 to 2012 than in any other year since the Centers for Medicare & Medicaid Services (CMS) began collecting the data in 1960. The news was welcomed, because for years soaring health-care expenditures had far exceeded U.S. economic growth.
But as Pew's State Health-care Spending Project found in a recent analysis, the national health-care spending story in 2011 and 2012 was very different from the experience of state and local governments, where spending increased twice as fast, principally because a temporary surge in federal Medicaid funding delivered through the American Recovery and Reinvestment Act stopped flowing. As state and local governments continue to navigate the aftermath of the Great Recession, health-care spending remains a source of fiscal pressure.