Studies Link Slowdown in Health Care Spending Growth to Recession
About 70% of the slowdown in health care spending growth between 2009 and 2011 was caused by the recent recession, according to a new study published Monday in Health Affairs, the Washington Post's "Wonkblog" reports (Millman, "Wonkblog," Washington Post, 8/4).
Earlier this year, CMS' Office of the Actuary reported that the nation's health care spending increased by 3.7%, to $2.8 trillion in 2012, marking the fourth consecutive year that spending growth was at a near-record low. The report's authors attributed the slowdown to several possible factors, including greater availability of lower-cost generic prescription drugs and a deceleration in total spending on nursing home care and prescription drugs (California Healthline, 1/7).
Economists from Northwestern University sought to determine what percentage of the slowdown in health care spending growth was caused by structural changes to the health care system and what portion was caused by the recent recession ("Wonkblog," Washington Post, 8/4).
For the study, researchers analyzed claims data from health insurers Aetna, Humana and United HealthCare (Reichard, CQ HealthBeat, 8/4). They compared health care spending trends from 2007 to 2009 and 2009 to 2011 in metropolitan areas that experienced sharp declines in employment-to-population ratios -- the percentage of working-age residents who were employed -- with metropolitan areas that did not experience significant, if any, declines (Dranove et al., Health Affairs, August 2014).
According to the study, health care spending growth from 2009 to 2011 declined by 2.6 percentage points compared with the previous two years. The study found that health care spending growth between 2009 and 2011 would have been 1.8 percentage points higher without the economic effects of the recession.
The researchers found that the remaining 30% decline in health care spending growth was caused by the effects of the Affordable Care Act, patents expiring for costly brand-name drugs and other structural changes within the health care system.
The researchers suggested that health care spending growth could increase as the economy improves. However, they also cautioned that it was too early to determine if the ACA and other structural changes would reduce such spending going forward.
Study co-author David Dranove said, "It's very possible that the trend for health-care spending to go back up as [the economy recovers] could very well be offset by the impact of the [ACA] and other trends that we're seeing in health care."
Longer Trend Also Linked to Recessions
Meanwhile, a working paper published Monday by the Brookings Institution found that a slowdown in health care spending growth since 2002 has mostly been caused by the previous two recessions ("Wonkblog," Washington Post, 8/4).
The paper -- written by Brookings Senior Fellow for Economic Studies Louise Sheiner -- found that increases in the gross domestic product resulted in increases in health care spending growth, although the effects occur over several years.
However, she cautioned that "it seems premature to either declare a turning point or to decide that nothing has changed." She added, "There remains much uncertainty about the likely trajectory of future health spending" (Sheiner, Brookings Institution, August 2014).
Spending Growth 'Stubbornly Resists' Lawmakers' Efforts
In related news, another study released Monday indicates that health care spending growth might "stubbornly resist" efforts by lawmakers to control it, CQ HealthBeat reports.
The RAND Corporation study, which was published in Health Affairs, found that a three-year pilot project of bundled payments did not have enough participation from payers and providers to meet its goals.
In the project, hospitals and physicians in California were paid a single fee for total knee replacement surgery and other orthopedic procedures. The intent of the experiment was to incentivize providers to deliver care more efficiently. However, the study found that too few procedures were covered by the bundled payments to draw any significant conclusions about quality or savings (CQ HealthBeat, 8/4).
The study found that several barriers -- including administrative burdens, regulatory uncertainty and disagreements about the composition of bundled payments -- discouraged providers from participating (Ridgely et al., Health Affairs, August 2014).
However, Susan Ridgely, the lead author of the study, said that the providers did gain technical experience that could "help future efforts to be more successful" (CQ HealthBeat, 8/4).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.