Health care spending growth stalls

By BenefitsPro

By Kathryn Mayer

Health care spending in the United States grew 3.7 percent in 2012 to $2.8 trillion, marking the fourth straight year of slowing growth.

That analysis comes from a new report released Monday by the Office of the Actuary at the Centers for Medicare and Medicaid Services.

Though the White House said Monday the trend is thanks to the Patient Protection and Affordable Care Act, economists countered that the law only had a “minimal impact” on the slowdown and attributed the trend mainly to the recession.

“The low rates of national health spending growth and relative stability since 2009 primarily reflect the lagged impacts of the recent severe economic recession,” said Anne B. Martin, an economist in the Office of the Actuary at CMS. “Additionally, 2012 was impacted by the mostly one-time effects of a large number of blockbuster prescription drugs losing patent protection and a Medicare payment reduction to skilled nursing facilities.”

Some PPACA provisions, coverage for dependents under 26, have increased spending, while other provisions, including cuts to hospital Medicare payments have offset the increase, the CMS report said.

Overall, PPACA contributed about 1 percent to rising costs since its passage in 2010, economists said.

Jeanne Lambrew, one of the president’s health care advisors, wrote in a blog post after the report was released that “there is no doubt” that the sustained slower growth rate was at least partially driven by PPACA.

“While there is a debate about how much the Affordable Care Act has contributed to this health cost slow-down, there is no doubt that it reduced Medicare spending growth, and most experts believe that Medicare savings spill over into the private sector,” Lambrew wrote. “And it is a fact that health care prices have grown at record-low rate — and are less affected by recessions and cost sharing than health care utilization is.”

The CMS report found that spending grew faster in areas such hospital care and doctors’ services and out-of-pocket consumer spending.

Prescription drugs and nursing home costs were main contributors for the slowdown.

Medicare spending also grew more slowly, with spending per Medicare recipient grew by 0.7 percent in 2012, down from 2.5 percent in 2011.

Perhaps most significantly, the report noted spending for private insurance grew more slowly, reflecting a shift to high-deductible plans with lower premiums.

The report said 9.4 million people lost their private insurance from 2007-2012.

“Declining enrollment was a major factor in the slow growth in overall private health insurance spending in the past several years,” the economists said in their report.

Whatever the reason for the recent reprieve in rising health care costs, it could be over soon.

CMS said they anticipate health spending to increase again in 2014, due to not only a recovering economy, but to the expanded Medicaid program and a flood of newly insured patients under PPACA.

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