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New Health Affairs: Health Spending Growth Remained Low In 2011
A new analysis  from the Office of the Actuary at the Centers for Medicare and Medicaid Services  (CMS), released today in the January 2013 issue  of Health Affairs, estimates that health care spending in the United States grew at a rate of 3.9 percent in 2011. That level of annual growth is identical to spending growth rates in 2009 and 2010, which means that growth in all three years has occurred at the slowest rates ever recorded in the 52-year history of the National Health Expenditure Accounts.
Total health care spending growth in 2010 and 2011 continued to track closely with the growth in nominal gross domestic product (GDP) in both years, and the health spending share of GDP stayed stable in 2011 at 17.9 percent. Yet despite the overall stability in health spending, “we observed faster growth in spending among some payers and services in 2011,” said Micah Hartman, a statistician in the Office of the Actuary at CMS and lead author of the Health Affairs article.
Hartman and his colleagues discussed their findings at a Washington DC media briefing  this morning. In addition to the CMS spending report, the new Health Affairs issue, “Transforming The Delivery Of Health Care ,” explores the opportunities and challenges involved in achieving better health and health care at lower costs.
2011 Spending Trends
In 2011, there was slower growth than in 2010 in the net cost of insurance and in noncommercial medical research. There was also a decline in spending in government public health activities. At the same time, there was faster growth in spending in 2011 than in 2010 for personal health care goods and services. Growth in this category was mainly due to an increase in nonprice factors, such as the use and intensity or complexity of services.
Faster growth in personal health care spending in 2011 was also driven by increased growth in spending for retail prescription drugs and physician and clinical services, which was partly offset by slower growth in spending for hospital services. Furthermore, from a payer perspective, spending for Medicare, private health insurance, and consumer out-of-pocket payments increased faster in 2011 compared to 2010, although spending for the Medicaid program grew more slowly.
On the whole, the impact of provisions of the Affordable Care Act on aggregate health spending growth in 2010 and 2011 was minimal. However, there was some impact on certain subcomponents of national health expenditures; for example, private health insurance spending and enrollment were impacted by the provision that expanded private health insurance coverage to dependents of enrollees up to age 26.
The major areas where spending growth accelerated in 2011 (over 2010) were:
The major areas where spending growth slowed (from 2010) were:
Looking To The Future
Later this year, Health Affairs will publish the CMS Office of the Actuary’s health care spending projections for the coming decade. In the 2011 spending report, Hartman and his colleagues note some signs of change from the past two years’ very slow spending growth, such as faster increases in the use and intensity of health care goods and services and a halt in the decline of private insurance enrollment.
“Nonetheless, economic, income, and job growth in 2011 was modest and less than might normally be expected during an economic recovery,” they write. “This fact raises questions about whether the near future will hold the type of rebound in health care spending typically seen a few years after a downturn.”
At the media briefing, CMS Chief Actuary Rick Foster said that the coming expansion of health coverage under the Affordable Care Act, together with the propensity of covered individuals to consume more health care, would tend to increase health spending. But he also observed that, particularly given Medicaid’s low provider-payment rates, treatment for someone newly covered under that program could be less costly than emergency department treatment at walk-in rates.
Pent-up demand left over from people forgoing elective care during the recession could increase spending growth, said Foster, who is retiring at the end of this month. On the other hand, increasing numbers of providers are “getting it,” realizing that greater efficiency will be required,” he said, although he noted the lack of concrete results to date.
“I think it’s fair to say that there is a tremendous amount of uncertainty about all of this,” Foster said. “The projections team is going to have their work cut out for them.”
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