Study Examines if Health Spending Drop is Permanent
Annual increases in the nations health care spending have significantly fallen in recent years, but that trend is longer than commonly believed, and it isnt yet clear if the trend is permanent, according to a new study published in Health Affairs.
Annual increases in the nation’s health care spending have significantly fallen in recent years, but that trend is longer than commonly believed, and it isn’t yet clear if the trend is permanent, according to a new study published in Health Affairs.
Annual per capita health spending rose by an average of 7.4 percent between 1980 and 2009, but the rate during the last decade of that period was 5.9 percent. From 2009 through 2011, the average rate fell to 3.1 percent.
“If this slowdown portends a new, lower level of spending growth, then dire forecasts of the national debt and additional taxes needed to support the health care system have been overstated,” say four study authors from Harvard Medical School. “However, if the slowdown is temporary and growth returns to previous rates, then the need for policy changes to create a sustainable system is more pressing than it appears.”
Whether the reduction in growth of spending is temporary or permanent is a subject of debate considered in the Health Affairs study. Lower spending could be explained by lost insurance coverage and lower incomes since 2007 when the financial crisis began, and increasing numbers of employees with less generous health insurance packages than previously, but spending increases could resume as the economy improves. Other studies find that because the slowdown started before the recession, structural changes have occurred that portend slower spending in the future.
Study authors caution that there is no definitive evidence yet to determine which way spending levels will go. But the authors do have their own initial conclusion. “Our findings suggest cautious optimism that the showdown in the growth of health spending may persist--a change that if borne out could have a major impact on U.S. health spending projections and fiscal challenges facing the country.”
The study, sponsored by the Robert Wood Johnson Foundation, is available here.
Annual per capita health spending rose by an average of 7.4 percent between 1980 and 2009, but the rate during the last decade of that period was 5.9 percent. From 2009 through 2011, the average rate fell to 3.1 percent.
“If this slowdown portends a new, lower level of spending growth, then dire forecasts of the national debt and additional taxes needed to support the health care system have been overstated,” say four study authors from Harvard Medical School. “However, if the slowdown is temporary and growth returns to previous rates, then the need for policy changes to create a sustainable system is more pressing than it appears.”
Whether the reduction in growth of spending is temporary or permanent is a subject of debate considered in the Health Affairs study. Lower spending could be explained by lost insurance coverage and lower incomes since 2007 when the financial crisis began, and increasing numbers of employees with less generous health insurance packages than previously, but spending increases could resume as the economy improves. Other studies find that because the slowdown started before the recession, structural changes have occurred that portend slower spending in the future.
Study authors caution that there is no definitive evidence yet to determine which way spending levels will go. But the authors do have their own initial conclusion. “Our findings suggest cautious optimism that the showdown in the growth of health spending may persist--a change that if borne out could have a major impact on U.S. health spending projections and fiscal challenges facing the country.”
The study, sponsored by the Robert Wood Johnson Foundation, is available here.