Study Links Slowdown in Health Care Spending to Weaker U.S. Economy
The recession and the slow recovery from it are the major driving forces behind a recent slowdown in health care spending, while higher patient cost-sharing and other changes to the health system play a smaller role, according to a study released yesterday by the Kaiser Family Foundation and the Altarum Institute, The Hill's "Healthwatch" reports (Viebeck, "Healthwatch," The Hill, 4/22).
For the study, analysts developed a model that tracked health care cost growth using economic indicators over the past 50 years to predict future growth rates for health care spending (Kliff, "Wonkblog," Washington Post, 4/22).
The study was prepared by Larry Levitt, senior vice president of KFF, along with KFF's Gary Claxton, Charles Roehrig of Altarum Institute and Thomas Getzen of the Fox School of Business at Temple University.
The study found that health care spending totaled about $2.8 trillion in 2012 and grew on average by 4.2% annually from 2008 to 2012, down from a recent peak of 8.8% annually between 2001 and 2003 (Reichard, CQ HealthBeat, 4/22).
The study showed that the recession and poor economic recovery accounted for 77% of the factors that contributed to the recent slowdown in national health care spending, while just 23% resulted from changes in the health care system, such as higher deductibles and other cost-sharing strategies made by insurers and medical providers (Terhune, Los Angeles Times, 4/22).
Although the effects of the recession that ended in 2009 will continue to lower health care spending for several more years, the economy eventually will recover, pushing the annual health spending growth rate to more than 7%, the report found (CQ HealthBeat, 4/22).
With regard to the Affordable Care Act, the study said the law likely will produce a one-time increase in health care spending in 2014 when millions of uninsured individuals gain health coverage (Los Angeles Times, 4/22).
However, it noted that several provisions -- such as the law's delivery-system reforms, its tax on high-cost health plans and its Medicare savings -- are designed to lower spending ("Healthwatch," The Hill, 4/23).
KFF Officials Comment, Economists React to Study
In a Washington Post opinion piece, Levitt and KFF President and CEO Drew Altman noted that increased efforts to curb health care spending could lower the spending growth rate by a percentage point, saving about $2 trillion over a decade. They added, "We need to be realistic about the fact that health spending will start going up more rapidly again as the economy improves," adding that individuals need to start "recognizing that the problem of health care costs is far from solved."
Meanwhile, some health economists were skeptical of the findings.
Jonathan Skinner, an economist and health policy expert at Dartmouth College, said that it is too soon to determine whether the slowdown in spending will last, but he added that "the results of this survey could suggest more caution in interpreting the slowdown as permanent."
Meanwhile, Paul Ginsburg, an economist and president of the Center for Studying Health System Change, said it also is too soon to tell if recent initiatives by health care providers, insurers and policymakers to curb health spending -- including new payment models such as accountable care organizations and bundled payments -- have been successful (Evans, Modern Healthcare, 4/22).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.