Health-care spending continued to take up a bigger share on the U.S. economy in 2007, as spending on hospitals, doctors, and medical services increased 6.1 percent to $2.2 trillion. However, the increase in health spending was the smallest since 1998, largely due to the growing use of generic drugs. In fact, federal health officials stressed that the good news about slowing the increasing costs of health care was only related to prescription drugs. All other major health sectors—including hospitals, doctors, nursing homes, and home health care—grew at the same rate or slightly faster than the previous year. Because prescription drugs generate only about 10 percent of total health spending, officials question how much longer the transaction to generics would slow growth in health-care costs. About 67 percent of medications prescribed in 2007 were generic drugs, up from 63 percent in 2006. Generics can cost as little as one-third the price of brand-name drugs.
