Policy: Health Care

CMS report says health spending remained low due to recession, not Obamacare

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Beltway Confidential,Opinion,Philip Klein,Health Care,CMS

Health care spending in the United States grew 3.7 percent in 2012, according to a new government study, representing the fourth straight year of relatively low medical inflation.

But the report from actuaries at the Centers for Medicare and Medicaid Services stipulated that the weak economy over the 2009-2012 time period is the most likely reason for the slowdown in the growth of health spending, not President Obama's health care law.

In 2012, the U.S. spent $2.8 trillion on health care, or $8,915 per person, according to the report, which was published in the January edition of Health Affairs. Of that spending, 56 percent came from private sources and 44 percent came from government at all levels.

Health care spending has been decelerating since 2003, when it peaked at a 9.7 percent growth rate. It grew between 3.6 percent and 3.8 percent annually since 2009.

Government health programs -- primarily Medicare and Medicaid -- are considered the biggest drivers of the nation's long-term debt. Therefore, if there were a more fundamental slowdown underway, it could greatly improve the nation's long-term fiscal outlook. That was part of the argument that Obama used to sell the nation on his health care law.

Some supporters of Obama’s March 2010 national health care law have argued that it deserves at least some of the credit for the slowdown in medical inflation.

But CMS actuaries wrote that the law “had a minimal impact on overall national health spending growth through 2012.”

Instead, the actuaries wrote, the slowdown in medical inflation, “primarily reflects the lagged impacts of the recent severe economic recession.”

In addition, 2012 was a year in which generic versions of a number of brand blockbuster drugs (such as cholesterol drug Lipitor) became available, so spending on prescription drugs increased just 0.4 percent.

At the conclusion of the study, the actuaries wrote that “health spending as a share of GDP often stabilizes approximately two to three years after the end of a recession and then increases when the economy significantly improves.”

The actuaries said that they would have to see more historical evidence to conclude that “a more fundamental change is occurring within the health care sector."

In 2012, health spending as a share of the economy fell slightly to 17.2 percent, from 17.1 percent in 2011.

In a report issued last September, CMS projected that in 2014, health care spending would spike by 6.1 percent as more people gained insurance through the health care law. By 2022, actuaries projected that spending would be 19.9 percent of GDP, or $621 billion higher than it would have been had the health care law never passed.

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