Politico by Brett Norman –
May 7, 2013:
Maybe health care won’t bankrupt the country after all.
A dramatic slowdown in the growth of health care spending in recent years could be here to stay, according to two studies published Monday by Health Affairs.
But whether the deceleration is just a temporary byproduct of the job losses and belt-tightening from the recession or the result of more enduring systemic changes is among the most controversial and potentially consequential debates in health care policy, and it’s by no means settled.
A study led by Harvard economist David Cutler found that if the recent trend holds up, projections of government spending on health care would plummet by $770 billion over the next 10 years, a figure large enough to have “an enormous impact on the U.S. economy and on government and household finances,” the study notes.
The researchers found that only about a third of the reduction in growth of health spending could be attributed to the 2007 to 2009 recession and that fully 55 percent is unexplained. That unexplained portion could be the result of more lasting changes, such as a slower introduction of medical device technology and new pharmaceuticals and a trend toward higher cost-sharing that forces people to be more careful about how health care dollars are spent, the researchers say.
“The evidence thus suggests at least as strong a case for structural changes as for cyclical factors,” the authors write.
A second paper by Harvard health policy researcher Michael Chernew and colleagues examined the role that increased out-of-pocket costs played in the slower health spending of large employers, and they found that changes in the design of benefits were partly responsible, but other factors also played a part.
National health care spending from 2009 to 2011 increased by about 3 percent per year — half of the nearly 6 percent growth that was seen over the previous 10 years.
In 2010 and 2011, health care spending by large employers grew even less — by 1.4 percent and 2.1 percent, respectively.
Examining claims data for 10 million enrollees in large employer plans, the researchers found that higher out-of-pocket costs accounted for about 20 percent of the slowdown in spending by those plans in 2010 and 2011, which suggests a large majority of the slowdown in spending growth is for other reasons — possibly a shift among providers toward a more fiscally conservative approach to care or a slower pace in the introduction to new technology.
But both studies acknowledged that it’s too early to predict whether the slowdown will in fact last, and many remain skeptical as to whether the good news is here to stay.
A study released last month by the Kaiser Family Foundation and the Altarum Institute found that more than three-quarters of the deceleration in national health spending could be attributed to the deep economic downturn, and that costs were likely to resume their skyward climb when the economy recovers.
Kaiser executives Drew Altman and Larry Levitt argued at the time that “we have seen this movie before,” noting that previous slowdowns have been followed by a return to normal.
“The idea that we have licked the problem of health care cost increases is no more probable today than it was in the past,” they wrote.
The fact is no one knows for sure.
On Monday, the Robert Wood Johnson Foundation also published a paper that reviews the health care spending trends and finds that the slowdown began before the recession, suggesting the entire effect cannot be attributed to the economic malaise.
Researchers John Holahan and Stacey McMorrow of the Urban Institute, who wrote the paper, do note, though, that health care spending historically rebounds after major cost-control efforts, which “creates understandable skepticism that the most recent slowdown will be lasting.”
If the slackening of health spending growth in recent years was “prompted by slow economic growth and declines in insurance coverage,” they write, “the motivation to contain costs may diminish as the economy recovers and coverage expands because” of the federal health law.