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Health Spending Rises Only Modestly

January 22, 2017

Spending on health care in the United States grew in 2013 at the lowest rate since the federal government began tracking it in 1960, the Obama administration said Wednesday.

It was the fifth straight year of exceptionally small increases in the closely watched indicator. The data defied critics who had said such slow growth would not continue for long once the recession ended in mid-2009.

Health spending totaled $2.9 trillion last year, up 3.6 percent from 2012, the administration said. The share of the economy devoted to health care, which appeared to be growing inexorably for decades, has been the same since 2009.

“The 3.6 percent increase in 2013 is the lowest increase on record in the national health expenditures going back to 1960,” said Micah B. Hartman, a statistician at the Centers for Medicare and Medicaid Services and lead author of the report, published in the journal Health Affairs. “The next lowest increase was 3.8 percent in 2009. These rates are within the range of the recent low rates of growth in health care spending, between 3.6 and 4.1 percent from 2009 to 2013.”

Spending for health care in 2013 averaged $9,255 a person, government economists and statisticians reported. Health spending grew at about the same pace as the economy and accounted for 17.4 percent of the gross domestic product, which reflects the total output of goods and services.

Among factors restraining the growth of health spending, the administration pointed to new limits on Medicare payments to hospitals and health maintenance organizations; automatic across-the-board cuts in federal spending required by a 2011 law; and the proliferation of high-deductible health insurance plans, which tend to discourage the use of care by requiring consumers to pay more of the cost.

Faster growth in Medicaid spending offset some of the slowdown in spending by Medicare and private insurance in 2013, officials said. The 2013 figures did not show the effects of major expansions in coverage that took effect this year.

Moreover, the data did not answer a question hotly debated by health policy experts and economists: whether the recent slowdown in health spending was attributable to aftereffects of the recession or to cost-control features of the Affordable Care Act, signed by President Obama in 2010. The civil servants who wrote the report said some provisions of the law “exerted downward pressure” on health spending while others “exerted upward pressure.”

“The key question is whether health spending growth will accelerate once economic conditions improve significantly,” the report said. “Historical evidence suggests that it will.”

Marilyn B. Tavenner, the administrator of the Centers for Medicare and Medicaid Services, said the report was “another piece of evidence that our efforts to reform the health care delivery system are working.”

Retail sales of prescription drugs totaled $271 billion last year, accounting for 9.3 percent of all health spending. This proportion has not increased substantially in recent years, but it results from two divergent trends: an increase in the use of high-cost specialty drugs and greater use of low-cost generic medicines.

“Higher prices for specialty drugs were due in part to expensive new medicines — in particular, those used to treat multiple sclerosis and cancer — as well as more rapid price increases for existing specialty drugs,” Mr. Hartman said. “Although specialty drugs accounted for less than 1 percent of prescriptions dispensed, they represented almost 28 percent of total pharmacy-related prescription drug spending in 2013.”

At the same time, the report said, the share of prescriptions filled with generic drugs climbed to 80 percent in 2013, up from 73 percent in 2011.

Under the Affordable Care Act, federal and state officials review insurance rates to identify “unreasonable increases in premiums,” and the government requires insurers to spend at least 80 percent of premium revenue on medical care and quality improvement activities. These provisions helped hold down health spending, the report said.

The government reported lower use of inpatient and outpatient hospital services in 2013, coinciding with requirements for patients to share more of the cost under some types of insurance.

For example, the report said, “the average patient cost-sharing charge per day increased 19.5 percent in 2013, while the average cost-sharing for an outpatient surgery episode increased by 10 percent.”

Over all, the report said, medical prices increased just 1.3 percent in 2013, slightly less than prices in the general economy. Prices for doctors’ services increased less than one-tenth of 1 percent, the smallest change since 2002, and prices for home health care services declined. While Medicare spending for doctors’ services increased 2.5 percent last year, Medicaid payments to doctors increased 14.9 percent, mainly because of a temporary increase in payment rates for primary care doctors treating Medicaid beneficiaries.

Medicare, for older Americans and people with disabilities, and Medicaid, for low-income people, accounted for more than one-third of all health spending.

Source: www.nytimes.com

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