KHN: Kaiser Health News
Detailed Report Delivers Good News On Health Costs, But Will It Last?
By Jay Hancock
January 6th, 2014, 4:04 PM
Definitive 2012 numbers show continued, historically low increases in medical
prices and the use of medical services. Health spending rose 3.7 percent, up
slightly from 2011 but far below the 8 percent increases of the early 2000s,
according to figures
released Monday by the Centers for Medicare & Medicaid
Services.
Health spending has grown faster than incomes and
overall economic output almost continuously for decades. But 2012 marked the
second year in a row in which health expenditures shrank slightly as a portion
of the economy. The annual CMS report is seen as the most precise
accounting of an industry that has grown to be a sixth of the economy. Early
results suggest that
health-cost escalation stayed moderate again in 2013.
Those trends, if continued, would transform dismal projections for government
deficits. They would give employers more room to raise workersf wages instead of
paying big increases for insurance premiums. They might ease the pressure to
increase consumersf out-of-pocket health costs.
But analysts who published the data gave much of the credit to lingering
effects of the 2008 economic crash. They refused to say the health-cost monster
is dead or even wounded.
And despite White
House claims that the Affordable Care Act should get credit for taming
medical spending, the health law played almost no role in raising or reducing
2012 health costs, the analysts said in the CMS report published in Health
Affairs. (Most of the lawfs coverage expansion doesnft become effective until
this year.)
gWe see no evidence to say that the cycle has been broken,h said Anne Martin,
a CMS economist.
Many factors that contained expenses are one-time deals. The
recession and its aftermath reduced demand for care. Expiring patents for
blockbuster drugs Plavix, Singulair and Lipitor meant health plans could buy
much cheaper generic versions. (Three-fourths of all prescriptions in 2012 were
less than $10.) Medicare cut payments to high-level nursing homes following an
increase the year previously.
Some 2012 results set historically low marks.
Private insurance health spending grew the least since 1986, said CMS
statistician Micah Hartman. The last time before 2011 that health expenditures
grew more slowly than the overall economy was 1997. Medical products and
procedures showed gthe lowest growth rate in prices in the recent past,h Martin
said. (Total health spending equals prices times the number of services and
products delivered.)
Health spending by the federal government, whose Medicare program for seniors
welcomed millions of baby boomers in 2012, fell by 0.6 percent.
Some sectors showed greater-than-average increases. Hospital
spending grew 4.9 percent, up from a 3.5 percent for 2011, driven by what
analysts described as new demand for care as the economy
recovered. Increased visits also helped push doctor office spending
up 4.6 percent.
The big question is whether those increases herald a return to past patterns.
Health costs usually slow down after recessions and then accelerate along with a
recovering economy. The Kaiser Family Foundation calculated
that three-fourths of the deceleration from 2008 to 2012 was caused by a
weak economy that prompted consumers to delay care and government to cut medical
outlays. (Kaiser Health News is an editorially independent program of the
foundation.)
But others think that something
may be different this time, that cost containment by business and government
combined with greater out-of-pocket costs borne by consumers may keep expenses
under control.
Not the CMS analysts.
gThe relatively low rates of growth that wefve seen over the last four years
c are consistent with what wefve seen in post-recessionary periods in the past,h
said Aaron Catlin, deputy director of CMSfs Health Statistics Group.
This entry was posted on Monday, January 6th,
2014 at 4:04 pm.