Health care spending grows at lowest-ever rate

Health care spending in the U.S. grew last year at the lowest rate ever recorded, due in part to the Affordable Care Act, the Centers for Medicare and Medicaid Services said Wednesday.

The slowing growth in health care spending to 3.6% from 4.1% in 2012 was attributed to factors including relatively slow economic growth and more gradual increases in private health insurance and Medicare spending, the CMS said.

Health care spending totaled $2.9 trillion, or $9,255 per person.

More high-deductible insurance plans and increases in the percent of health care costs borne by consumers also contributed to the slower rate of increase, said Micah Hartman, a statistician in CMS' Office of the Actuary. The more people have to pay for health care treatment out of pocket, the less they tend to use.

The most recent increase was the lowest since the government started tracking health expenditures in 1960. The next lowest was 3.8% in 2009.

Although the slow growth for 2012 was a surprise, experts did expect a drop in the growth rate for 2013, said Jose Fernandez, an associate professor of economics at the University of Louisville.

"We haven't completely bent the health spending curve," says Fernandez. "But it is bending. ... It's a good sign that we're clamping it down."

A key question, however, is how much of the slowing is "people not getting access to care," or how much can be attributed to cost-control efforts, he says.

U.S. health care spending had grown faster than the rest of the economy for as long as experts have been keeping track, says Gary Claxton, vice president at the Kaiser Family Foundation. That's partly because as the nation grew wealthier, Americans wanted more health care, including the latest expensive treatments.

For years, health care spending was about 2 percentage points ahead of the gross domestic product; if the GDP grew by 3% a year, health care spending grew by 5% a year.

Health care spending grew very rapidly in the early 2000s, and was projected to reach 20% of GDP by 2020. The new report shows it stayed at 17.4% of GDP last year.

But health spending slowed down when the recession hit.

"There's some debate about why," Claxton said. "Some of it has to do with people losing employer-based insurance and having less money to spend."

That makes federal officials including Hartman worry that it will tick back up as the economy improves: "Historical evidence suggests it will," he says.

Some experts attribute the slowdown in growth to "efficiencies" in health care, such as payment reforms and the growing number of accountable care organizations, which are formed when doctors and hospitals partner to treat groups of patients.

Reductions in Medicare payments to providers helped slow growth, the CMS said, but increases in payments to doctors treating the much larger numbers of Medicaid patients increased it. Medicaid enrollment was up 2.7%, while spending per enrollee grew 3.3%.

Prompted by the ACA, health care providers are focusing more on cost-containment and efficiency while millions more people are now insured, which lowers hospitals' uncompensated care costs, says Eric Wright, a professor of sociology and public health at Georgia State University. Hospitals are required to at least stabilize patients who show up in their emergency rooms, even if they can't afford to pay.

Wright says he's not sure if the slowdown will continue in the years ahead.

"I certainly hope so," he says. "I think it has to happen. (But) how long it lasts we don't know."

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