Health costs don’t rise as quickly — but don’t celebrate

Filed Under: Costs, Patients, Providers

 

“Health care spending experienced historically low rates of growth in 2009 and 2010 as the impact of the recent recession continued to affect the purchasers, providers, and sponsors of health care,” the journal Health Affairs reports in a new article.

But what does this mean? Does it mean that the nation’s  health costs have suddenly stopped their sharp increases?

Maggie Mahar, writing on “Moneyland” in Time.com, explains: “The nation’s health care bill rose by less than 4% in both 2009 and 2010. In 50 years, health care spending has never increased at such a slow pace. Could this mean that, after a half century of eye-popping inflation in health care expenditures, efforts to rein in costs are actually working?”

Sadly, Anne Martin, the chief author of Health Affairs article, and an actuary at the Center for Medicare Services, concludes that the answer is no. “Persistently high unemployment, continued loss of private health insurance coverage, and increased cost sharing led some people to forgo care or seek less costly alternatives than they would have otherwise used. As a result, growth in the use and intensity of health care goods and services in 2010 accounted for a much smaller share of personal health care spending growth than in previous years. Finally, as businesses, households, and state and local governments financed a smaller share of total national health care spending during and just after the recession, the federal government financed a larger share.”

The news is bad, but not all bad:

“Out-of-pocket spending by consumers increased 1.8 percent in 2010, accelerating from growth of 0.2 percent in 2009 but still slower than its average annual growth of 4.8 percent between 2000 and 2008,” the authors write. ‘Faster growth in 2010 partially reflects higher cost-sharing requirements for some employees; consumers’ switching to plans with lower premiums and higher deductibles or copayments, or both; and the continued loss of health insurance coverage and resulting higher out-of-pocket spending. Out-of-pocket spending growth for physician and clinical services and dental services increased in 2010 (following declines in 2009) but was mitigated by a decrease in out-of-pocket spending on prescription drugs.”

Mahar concludes: “In other words, they’re arguing that health care isn’t really getting cheaper. It’s just that hard times have been forcing Americans to skip needed care, bringing overall expenditures down.”

As Robert Samuelson writes over at The Washington Post, “It turns out that there is a way to control health spending: clobber the economy.”