Rise of nursing home spending slows, hits $125 billion overall

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The growth of spending on nursing home care slowed last year, even as the new Medicare drug benefit sent waves of change through the U.S. healthcare-spending scene.

Spending on nursing homes grew at a 3.5% clip in 2006 (to $125 billion total), the slowest increase since 1999 and down from a 4.9% rise the year before, according to a new analysis in the journal Health Affairs. But administrative costs soared more than twice as quickly last year for nursing facilities, as well as for physicians and hospitals, according to the report.

In 2006, overall health spending rose 6.7%, or a little faster than in 2005. The total inched up to about 16% of U.S. goods and services.

Health spending averaged $7,000 per person in 2006, totaling more than $2 trillion for the first time, or double that of about 10 years ago. The new Medicare drug benefit also led to the first decline in overall Medicaid spending since the program began more than 40 years ago, according to the Center for Medicare & Medicaid Services.