One es­ti­mate shows health­care spend­ing growth dropped in 2012

2012 growth pegged at 4.3% through Novem­ber

Modern Healthcare - - NEWS - Me­lanie Evans

The Great Re­ces­sion that ended 3½ years ago con­tin­ued to drag down na­tional spend­ing on health­care in 2012, ac­cord­ing to a new es­ti­mate of U.S. health­care ex­pen­di­tures. Re­ces­sions “have a lagged ef­fect on health spend­ing,” said Char­lie Roehrig, di­rec­tor of the Al­tarum In­sti­tute’s Cen­ter for Sus­tain­able Health Spend­ing.

The cen­ter’s monthly na­tional health spend­ing es­ti­mates for the first 11 months of last year showed growth rates have edged up­ward from the pre­vi­ous year, but re­main his­tor­i­cally low. “It can go out quite a few years,” Roehrig said.

With CMS ac­tu­ar­ies poised to re­lease their es­ti­mates for 2011 on Mon­day, the Al­tarum anal­y­sis showed an uptick in the first half of that year that pushed growth to an es­ti­mated 5.2%. But 2012 spend­ing reg­is­tered a more mod­er­ate growth of 4.3% through Novem­ber, ac­cord­ing to Ge­orge Miller, an Al­tarum In­sti­tute fel­low.

Fed­eral es­ti­mates for ac­tual U.S. health spend­ing lag by slightly more than a year. How­ever, fed­eral pro­jec­tions for 2011 and 2012, re­leased last July in the jour­nal Health Af­fairs, also sug­gested that health spend­ing re­mains rel­a­tively slug­gish.

U.S. health spend­ing, with av­er­age an­nual growth of 9.6% since 1960, slowed sharply with the 18-month re­ces­sion that ended in June 2009 to a record low of 3.8% that year, ac­cord­ing to fed­eral es­ti­mates. The se­vere down­turn, with its high job losses and re­duc­tion of house­hold in­comes to lev­els no higher than a decade ear­lier, dra­mat­i­cally slowed health spend­ing. The econ­omy’s drag on the sec­tor con­tin­ues, fed­eral es­ti­mates show.

In their re­cent re­ports, fed­eral ac­tu­ar­ies said that in a tepid eco­nomic re­cov­ery, less use of med­i­cal care and mod­est health­care in­fla­tion would hold 2011 na­tional health spend­ing growth to a near-record low rate of 3.9%.

Ac­tu­ar­ies an­tic­i­pated slightly faster growth in 2012, 4.2%, as house­holds and em­ploy­ers con­tinue to seek to curb health spend­ing.

“Clearly the econ­omy is im­por­tant,” said Paul Gins­burg, a health econ­o­mist and pres­i­dent of the Cen­ter for Study­ing Health Sys- tem Change. But fed­eral data also re­flect a slow­down in Medi­care spend­ing, which is less sus­cep­ti­ble to the econ­omy; that sug­gests health pol­icy may have also damp­ened spend­ing. Medi­care spend­ing grew 5% in 2010 com­pared with 7% the prior year, fed­eral data show.

Gins­burg said he did not be­lieve more slug­gish Medi­care growth was at­trib­ut­able to ac­count­able care, which he said has too lit­tle of a share of spend­ing to in­flu­ence growth rates.

The Stan­dard & Poor’s Health­care Eco­nomic In­dices have re­ported con­sis­tently slower growth in Medi­care rev­enue. The rat­ing agency re­ported a 2.41% growth rate for rev­enue paid to hos­pi­tals and pro­fes­sional ser­vices from Medi­care fee-for-ser­vice for the year ended in Oc­to­ber. The Medi­care rev­enue growth rate dipped be­low 3% in mid-2010 and has re­mained there since.

Gins­burg noted faster growth rates for com­mer­cial in­surance rev­enue, which in­creased 7.16% dur­ing the same 12-month pe­riod.

Fed­eral pro­jec­tions re­leased last July show an over­all Medi­care spend­ing growth rate of 6.3% for 2011 and 5.9% for 2012.

Ac­tu­ar­ies also pro­jected a sharp slow­down for Medi­care spend­ing in 2013 un­der poli­cies that re­quire steep cuts to physi­cian pay and an up to 2% Medi­care cut. How­ever, with­out the physi­cian pay cut—which Congress de­layed for a year in a last-minute bud­get deal on Jan. 1—Medi­care growth for 2013 was pro­jected to be 5%.

De­spite the slow­down in na­tional health spend­ing, the health­care ser­vices sec­tor con­tin­ued to hire through the re­ces­sion, though the sec­tor’s job growth dipped be­low av­er­age for the last decade in 2009, 2010 and 2011.

The sec­tor saw av­er­age hir­ing growth of 2.3% for 2012, ac­cord­ing to pre­lim­i­nary data that the U.S. Bureau of La­bor Statis­tics re­ported Jan. 4, adding 45,000 jobs in De­cem­ber and ac­count­ing for more than a quar­ter of the in­crease all non­farm em­ploy­ment that month.

Roehrig said weaker wage growth may be one fac­tor that could help rec­on­cile steady health­care hir­ing with the in­dus­try’s his­tor­i­cally slow spend­ing growth.

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