America Hits the Brakes on Health Care Spending

MedicareWASHINGTON (AP) - Is health-care relief finally in sight?

Health spending stabilized as a share of the nation's economy in 2010 after two back-to-back years of historically low growth, the government reported Monday.

Experts debated whether it's a fleeting consequence of the sluggish economy, or a real sign that cost controls by private employers and government at all levels are starting to work.

The answers will be vital for Medicare's sustainability, as well as for workplace coverage.

U.S. health care spending grew by 3.9 percent in 2010, reaching $2.6 trillion, according to the report by the Health and Human Services department.

That's an average of $8,402 per person - far more than any other economically advanced country.

Still, the increases for 2010 and 2009 were the lowest measured in 51 years. And health care as a share of the economy leveled off at 17.9 percent, the first time in years there's been no growth.

The main reason for the slowdown was that Americans were more frugal in their use of health care, from postponing elective surgery to using generic drugs and thinking twice about that late-night visit to the emergency room.

"Although medical goods and services are generally viewed as necessities, the latest recession has had a dramatic effect on their utilization," said the report published in the journal Health Affairs. "Though the recession officially ended in 2009, its impact on the health care sector appears to have continued into 2010."

Independent economists issued conflicting assessments.

"I think it could signal slower growth in the future," said Ken Thorpe, professor of health policy at Emory University in Atlanta. "Any discussion about reducing the deficit is going to focus on how we reduce the growth in health-care costs. And employers are adopting more effective tools to keep putting downward pressure on health-care cost increases."

But his counterpart Len Nichols at George Mason University in Virginia said people are getting less medical care because too many have lost jobs and insurance, and they just can't afford to pay.

"The slowdown is mostly due to postponement of care, due to anticipated inability to pay," said Nichols. If he's right, that could mean costs will spike once the economy is on solid footing.

The report provided relief for a jittery White House facing a 2012 reelection campaign in which President Barack Obama's health care overhaul is a top target for Republicans.

The nonpartisan number crunchers at HHS found that the health care law barely contributed to cost increases in 2010 - just one-tenth of 1 percentage point. Major provisions expanding coverage to more than 30 million uninsured don't take effect until 2014, well after the presidential election.

The federal government's share of the total health care tab - another issue in this year's political debate - grew to 29 percent in 2010, up from 23 percent as recently as 2007. Counting state and local spending, the overall government share stood at 45 percent of the total.

Medicare spending grew by 5 percent in 2010. That was slower growth than in 2009, due mainly to reductions in what the government paid private Medicare Advantage insurance plans. Medicaid spending increased by 7.2 percent, less than the 2009 rate because of fewer people covered by the program.

However, the main finding of the report was a continued slowdown in the use of services across major health-care categories, one researchers termed "dramatic." Higher copayments for those with private insurance are part of the reason.

Hospital care, which accounts for just over 30 percent of what Americans spend, grew more slowly because of a decline in a key measure of inpatient admissions, and slower growth in emergency room visits, outpatient appointments, and outpatient surgery.

Spending on doctor visits and related care - about 20 percent of the total - grew at a historically low rate of 2.5 percent, due to an overall drop in visits and a milder 2010 flu season. But spending on dental care increased faster than in 2009.

Prescription drugs, about 10 percent of overall spending, also saw a slower increase - just 1.2 percent in 2010. That was not only due to the continuing shift to generic drugs, but also slower growth in the overall volume of medications that Americans took.

Will less health care hurt consumers?

That remains to be seen, but current evidence suggests it won't. Americans are no healthier than their counterparts in other developed countries, which spend far less. And research suggests that as much as 30 percent of tests and treatments for U.S. patients may be of little or no benefit.

The HHS researchers refused to speculate about the implications of the slowdown, although their report stressed the connection to a weak economy. More may be known by the summer, when another team of researchers in the same HHS unit will update projections for future health care spending.

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Healthcare costs might be rising but some health insurance companies are losing quarterly profits. To read more check out the American Action Forum.

January 27 2012 at 9:46 AM Report abuse rate up rate down Reply

My deductibles, coinsurance, premiums, and amount paid for uncovered expenses were more than I spend on either utilities or gasoline. This is on Medicare with Part A, B, and D and no Medicare Supp. I take meds for cholesterol and arthritis but nothing else. Hang onto your asses, folks, you're either going to be poor or sick.

January 11 2012 at 5:29 AM Report abuse rate up rate down Reply

This is a liberal hype piece. The terminology used indicates a liberal bias. "economicly advantaged" What a hack writer.

January 11 2012 at 4:33 AM Report abuse rate up rate down Reply
2012 Clark 2012

I was paying $360.00 per month for my own self for health insurance back in 2010. I knew it was a rip off and i just cancelled my health insurance in december of 2010. Now its jan 2011 and i feel more healthier knowing i don't have to fooled by doctors into bogus doctor visits that last under 3 minutes while the billing dept spends 3 times as long getting thier money out of a healthy persons pocket and setting up more quick doctors appts for MONEY.

January 11 2012 at 3:11 AM Report abuse rate up rate down Reply
Maxim Lis

Now a days healthcare is so expensive. People of low standard cant afford the charges of multispecialty hospitals. Healthcare is now introduced as business as market . So with increasing rate of market, its price is also increasing.

January 11 2012 at 1:38 AM Report abuse rate up rate down Reply
Tommy T

I have to agree with the Gearge Mason University people on this. Healthcare has gotten so expensive a lot more people just can't afford it as they could in the past. Although to be fair, I believe healthcare has been grossly overused in many instances in the past. For example, in emergency rooms I have witnessed numerous times when people's ideas of emergencies have been anything but emergencies. ER's clogged with people who have colds, flu, tummy-aches, mild fevers, tiny superficial wounds, "I can't poop", "I fell down", "Johnny fell down", "Susie swallowed a penny", "Melvin ate a bug", "Jimmy put a bead in his ear". But when they thought the insurance would cover it and all of the unnecessary office calls, it was alright. Perhaps what we need are health plans that cover true emergencies and serious illness but not trivial matters or repetitious and often unnecessary office visits. Also more education of the general public about medical matters; about what things are serious and what things can be taken care of in the home.

January 11 2012 at 1:11 AM Report abuse rate up rate down Reply

Spending for healthcare is down because NOBODY CAN AFFORD IT!

January 11 2012 at 12:30 AM Report abuse rate up rate down Reply

Once the national health bill goes in effect the prices should come down since more poeple will be paying in

January 10 2012 at 10:31 PM Report abuse +3 rate up rate down Reply
1 reply to hardgene's comment

...and when the Supreme Court strikes it down it will prove to be the disaster it was meant to be....

January 11 2012 at 12:28 AM Report abuse -1 rate up rate down Reply

We all have to pay for the ones that dont.

January 10 2012 at 9:23 PM Report abuse +4 rate up rate down Reply

Let me tell you what Obama care has done to my wife and I. In the past 2 years it has doubled. The number of companys to choose from was 5 then it went to 2. Now I have not been able to aford health care because of my job loss. My wife is very sick and we have no insurance. To get it we would have to wait 6 months. the cost would be $366 Higher deductable than we had and 1/2 the benifits. Oh yes we she can get insurance for pre existing conditions at $760 per month. Thank for F***ing this one up Obama! Like you really care about the middle class.

January 10 2012 at 9:17 PM Report abuse rate up rate down Reply
1 reply to rmhbiz4u's comment

It's not "obamacare" that's the culprit. You are suffering now because of the compromises made with republicans that rendered a great national health carte concept utterly ineffective and worthless. If the USA had a national healthcare system like the rest of the western industrialized world where for-profit insurance companies were out of the health care equation, you would not be whining as you are now. No doubt you are a short sighted republican and cant seem to connect the dots. If you get your way and the republicans gain full control of the government again, Trust me you will be in worse shape than you are now. For the record, Im not a fan of Obama, nor am I a democrat. Just an objective observer from the outside.

January 11 2012 at 4:33 AM Report abuse rate up rate down Reply