National health spending in 2012 continued a four-year low growth rate, a new report says. / Alejandro Gonzalez, USA TODAY
WASHINGTON - National health spending grew 3.7% in 2012, continuing a four-year low growth rate, according to a new report.
Health spending was about $8,915 per person in 2012, the Office of the Actuary at the Centers for Medicare and Medicaid Services found in a report released Monday in Health Affairs. The rate of growth has remained between 3.6% and 3.8% since 2009. In 2002, the rate was 9.7%.
Still, the authors said they could only credit the recession for the slowdown because they did not have the data to show it was a long-term trend.
"It's consistent with what we've seen with post-recessionary periods in the past," said Aaron Catlin, a deputy director of the National Health Statistics Group at the actuary. "We really only have taken the data and estimated it through 2012."
The researchers would not comment on 2013 or trends moving forward, saying they have to wait for the data. However, they did explain why the growth spending rate seems to be stabilizing after the recession years. Anne Martin, lead author on the report, said that both consumers and employers make decisions about health care based on what's happening at the time, but those decisions can affect costs for years to come.
"It takes time for contracts to work their way through the health system, to be negotiated," she said. Some of those contracts are negotiated more than a year in advance.
And Catlin said the costs fluctuate as people face unemployment, and gain Medicaid coverage, while their bosses pay less for coverage overall until they begin hiring again. Consumers also may have a mentality of "spend less" after years of a poor economy.
"Several years later, as these factors start to converge, that's when you get the stabilization," Catlin said.
The researchers attributed much of the slowed growth rate to several one-time events, including reduced payments to most providers through Medicare because of the Affordable Care Act, as well as several popular medications coming off-patent and, therefore, allowed to be replicated as generic medications. In 2012, they also saw slower growth in health-related equipment purchases because of the end of funding from the American Recovery and Reinvestment Act of 2009.
The health spending rate grew in four areas: Hospital spending, up 4.9%; physician and clinical services, up 4.6%; Medicaid spending, up 3.3%, but still holding at the slowest growth rate in Medicaid's history; and out-of-pocket spending, at 3.8%, primarily due to cost-sharing changes in insurance, such as for high-deductible plans.
Private businesses continued to pay for a steady share of spending, with their portion remaining at about 21% since 2009. Before 2007, spending growth for private businesses had been about 4.4% every year. The authors attributed this to job losses and fewer people insured through their employers.
The researchers said just .1% on the dollar in growth was due to the Affordable Care Act, much of which had yet to be enacted in 2012. Changes included rebates for Medicare drugs to help fill the coverage gap; enabling people younger than 26 to get insurance coverage under their parents' plans; and requiring insurers to use the majority of premium payments toward actual healthcare, rather than administrative costs or salaries.
The White House immediately commended the results in a blog post from Jeanne Lambrew, deputy assistant to the president for Health Policy. She said the findings mean "the years 2009 to 2012 saw the slowest growth in U.S. health care expenditures since the government started collecting this information in the 1960s."
She said the Affordable Care would help sustain slow growth because it "prioritized improving the efficiency of the health care system, creating opportunities for doctors and hospitals to deliver high quality care at lower total cost," she said. She cited discouraging hospital readmissions and the move toward managed care transitions as reasons why there were 130,000 fewer readmissions for Medicare beneficiaries from January 2012 to August 2013.
"Fewer readmissions mean lower costs for Medicare and seniors and better care as well," she wrote. "The law is also reducing wasteful overpayments to medical providers and insurers through Medicare."
A November report from the White House Council of Economic Advisers found that health care spending since the passing of the law in 2010 has risen at 1.3% a year, the lowest rate ever reported, and that health care inflation is the lowest it has been in 50 years. That report used data from the Office of the Actuary, including projections from 2012. That report noted that the Congressional Budget Office reduced Medicare and Medicaid spending projections in 2020 by $147 billion since 2010.
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