Health Spending Growth Slows, But Obamacare Impact ‘Minimal’

Jan 6, 2014 4:00pm

For the fourth year in a row, Americans’ spending on health care grew at one of the slowest rates ever recorded.

National health expenditures in 2012 increased just 3.7 percent over the year before – a rate relatively stable since 2009 and at historic lows, according to new analysis from the Centers for Medicare and Medicaid Services.

All told the country spent $2.8 trillion on health care, or $8,900 per person, last year, gobbling up 17 percent of the economy.

Where did Americans spend the most?  More than half went to physicians, clinics and hospitals, which saw an uptick in spending over the year due to rising prices and increased use of their services.

MORE: Investigating the High Costs of Hospital Bills

Meanwhile, spending on prescription drugs dipped sharply, largely because expiring patents for “blockbuster drugs” (Lipitor, Plavix, et al.) spurred sales of lower-cost generics.

If you’re wondering whether this means health care costs have stabilized, don’t pop open the champagne just yet.

Experts say the trend mostly reflects the temporary, residual impacts of the Great Recession – including high unemployment, loss of private health insurance coverage and declining incomes — rather than any fundamental shift in the health care system writ large.

“The relatively low rates are consistent with what we’ve seen in post-recessionary periods in the past,” noted Aaron Catlin, deputy director of the National Health Statistics Group at CMS.

As for the Affordable Care Act, it has had a “minimal impact” on overall health spending since 2010, according to CMS, but a net positive one at that.

President Obama’s signature health care law has resulted in a net increase in spending of 0.1 percent between 2010 and 2012, said Anne Martin, a CMS economist. That means Americans are spending more on aggregate under the law than they would have without it.

Fact Check: Is Obamacare Slowing Growth of Health Costs? 

Still, the White House maintains the CMS actuaries report does not present the full view of Obamacare’s effect on health spending and has actually helped to reduce it.

An administration official said the law’s changes to Medicare resulting in savings would have a “spill over” effect in the private sector. The official also said that new efficiency in the health system, including a reduction in hospital re-admissions, brought by Obamacare initiatives was lowering costs.

The CMS actuarial analysis acknowledges that aspects of the law have helped to rein in spending in certain areas of the health sector, particularly Medicare and Medicaid. But it found that, overall, spending grew because of its provisions.

The CMS actuary projected in September that Obamacare will accelerate national health spending in 2014 to 6.1 percent with the law in full effect, more Americans accessing health care, and economic conditions improved.

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