Health Spending Growth Stays Low for Third Straight Year

The rate of increase in health spending, 3.9 percent in 2011, was the same as in 2009 and 2010 — the lowest annual rates recorded in the 52 years the government has been collecting such data.

Federal officials could not say for sure whether the low growth in health spending represented the start of a trend or reflected the continuing effects of the recession, which crimped the economy from December 2007 to June 2009. So far, the report said, the 2010 health care law has had “no discernible impact” on overall health spending.

The recession increased unemployment, reduced the number of people with private health insurance, and lowered household income and assets, and therefore tended to slow health spending, said Micah B. Hartman, a statistician at the federal Centers for Medicare and Medicaid Services.

In their annual report, federal officials said that total national spending for prescription drugs and doctors’ services grew faster in 2011 than in the year before, but that the growth in spending for hospital care slowed.

Medicaid spending likewise grew less quickly in 2011, as states struggled with budget problems. Medicare grew more rapidly because of an increase in “the volume and intensity” of doctors’ services and a one-time increase in Medicare payments to skilled nursing homes, said the report, published in the journal Health Affairs.

National health spending grew at roughly the same pace as the overall economy, without adjusting for inflation, so its share of the economy stayed the same, at 17.9 percent in 2011, where it has been since 2009. By contrast, health spending accounted for 13.8 percent of the economy in 2000.

Health spending grew more than 5 percent each year from 1961 to 2007. Sometimes it spurted at double-digit rates, including every year from 1966 to 1984 and from 1988 to 1990.

The report did not forecast the effects of the new health care law on future spending. Some provisions of the law, including subsidized insurance for millions of Americans, could increase spending, officials said. But the law also trims Medicare payments to many health care providers and authorizes experiments to slow the growth of health spending.

“The jury is still out, whether all the innovations we’re testing will have much impact,” said Richard S. Foster, who supervised preparation of the report as chief actuary of the Medicare agency. “I am optimistic. There’s a lot of potential. More and more health care providers understand that the future cannot be like the past, in which health spending almost always grew faster than the gross domestic product.”

Evidence of the new emphasis can be seen in a series of articles published in The Archives of Internal Medicine, now known as JAMA Internal Medicine, under the title “Less Is More.” The series highlights cases in which “the overuse of medical care may result in harm and in which less care is likely to result in better health.”

Total spending for doctors’ services rose 3.6 percent in 2011, to $436 billion, while spending for hospital care increased 4.3 percent, to $850.6 billion.

Spending on prescription drugs at retail stores reached $263 billion in 2011, up 2.9 percent from 2010, when growth was just four-tenths of 1 percent. The latest increase was still well below the average increase of 7.8 percent a year from 2000 to 2010.

Federal officials said the increase in 2011 resulted partly from rapid growth in prices for brand-name drugs.

Prices for specialty drugs, typically prescribed by medical specialists for chronic conditions, have increased at double-digit rates in recent years, the government said. In addition, it said, spending on new brand-name drugs — those brought to market in the prior two years — more than doubled from 2010 to 2011, driven by an increase in the number of new medicines.

Article source: http://www.nytimes.com/2013/01/08/us/health-spending-growth-stays-low-for-third-straight-year.html?partner=rss&emc=rss