Study: Slowdown in Health Spending Growth Linked to the Economy
April 22—The slower growth rate in the nation’s healthcare spending in recent years stems mainly from economic factors beyond the healthcare system, according to a study by the Kaiser Family Foundation and the Altarum Institute.
Based on statistical analysis of 50 years of health spending and economic trends, the study finds that economic factors alone account for 77 percent of the reduced growth in national health spending from its 8.8 percent peak in 2001 to 2003. The remaining 23 percent results from healthcare system changes, potentially including higher deductibles and other cost sharing that dampen patients’ use of services, as well as various forms of managed care and delivery system changes. The study’s researchers cannot determine the separate impact of those factors.
Government statistics show that healthcare spending grew by 3.9 percent each year from 2009 to 2011—the slowest growth since the government began tracking it in 1960. Estimates suggest that slow growth in health spending continued into 2012. On average, health spending grew by 4.2 percent per year from 2008 to 2012, down from the recent peak of 8.8 percent from 2001 to 2003.
The authors conclude that more rapid growth in healthcare spending is expected in coming years if the economy strengthens.
HFMA Analysis: It’s not surprising that healthcare cost growth is correlated with the strength of the economy. The key to sustainability over the long term is limiting excess cost growth, which has fallen to levels not seen since the managed care boom of the mid- to late 1990s due to mechanisms such as high-deductible plans and better coordinated care via patient-centered medical homes, accountable care organizations, and bundled payments. If these initiatives suffer the same fate as managed care plans in the 1990s, however, state and federal agencies likely will further intervene to try to constrain cost growth.
Publication Date: Monday, April 22, 2013