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Study: Growth in health spending, curbed by recession, to rebound

April 22, 2013|By Chad Terhune
  • Increases in U.S. healthcare spending, which slowed in recent years, will pick up again as the economy recovers, a new study says.
Increases in U.S. healthcare spending, which slowed in recent years, will… (Francine Orr / Los Angeles…)

A new study attributes a slowdown in U.S. healthcare spending to the recent recession and predicts more rapid growth as the economy strengthens.

The report issued Monday by the Kaiser Family Foundation seeks to shed light on the reasons behind the recent drop-off. The analysis found that economic factors related to the recession accounted for 77% of the reduced growth in national healthcare spending, which totaled an estimated $2.8 trillion in 2012.

The remaining 23% resulted from changes in the healthcare system, such as higher patient deductibles and other changes made by insurers and medical providers, the study said.

U.S. healthcare spending grew 3.9% a year in 2009-2011, according to government data, the lowest growth rate since the government began tracking it in 1960, and down significantly from annual growth averaging 8.8% in 2001-2003.

Quiz: How much do you know about healthcare?

There's been widespread debate among policymakers and healthcare experts over whether the recent slow growth in spending marked a temporary reprieve or a longer-lasting change in direction.

"The problem of health costs is not solved, and we need to be realistic that health-spending increases will return to more typical levels as the economy improves," said Drew Altman, chief executive of the Kaiser Family Foundation.

"If we could shave even a percentage point or more off annual healthcare spending increases, we could save trillions of dollars over the next decade," Altman added.

This analysis predicts the annual growth rate in health spending could return to more than 7% by 2019 as economic growth picks up steam.

The report was prepared by the Kaiser Family Foundation, a nonprofit group based in Menlo Park, Calif., and the Altarum Institute, a nonprofit based in Ann Arbor, Mich.

The study noted that the federal Affordable Care Act is likely to produce a one-time increase in health spending starting next year as millions of more people gain private insurance or qualify for Medicaid under an expansion of that government insurance program for the poor.

The federal overhaul is also designed to generate savings through smaller Medicare reimbursements to medical providers and insurers and through other cost-cutting provisions.

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