Experts Link Recession, Changing Views to Drop in Health Care Spending

Policy experts, hospital administrators and academics acknowledge that the weak economy has played a key role in the recent decline in health care spending, but many of them also suggest that the decline could be a result of changing views among health care providers and patients about health care spending, a trend that could continue as the economy recovers, the New York Times reports.

The latest CMS data show that total health care spending nationwide in 2009 and 2010 grew at less than 4% annually, the slowest annual growth rate in more than 50 years. Meanwhile, after years of accounting for a growing share of the country's economy, U.S. health care spending in 2010 hovered at 17.9% of the gross domestic product, the Times reports.

According to the Times, health economists did not expect such a sharp deceleration in health care spending, and some experts note that there still is insufficient data to determine whether the downward trend will continue or if it should be considered as "merely a blip" caused by the economy's weakness.

David Cutler, a Harvard University health economist and former adviser to President Obama, said, "The recession just doesn't account for the numbers we're seeing," adding, "I think there's much more going on."

Some experts also point to the decline in spending on some hospitalized Medicare beneficiaries, whose coverage should not be affected by the recession, the Times reports. Experts also suggest that other unknown factors might have played a role in states where the recession had little effect.

Meanwhile, some experts and officials at CMS say the downward trend in health care spending can be attributed to the recent growth in high-deductible health insurance plans. According to Mercer Consulting, the rate of employees enrolled in high-deductible plans jumped from 3% in 2006 to 13% in 2011.

Other observers believe the shift toward accountable care, which places a premium on quality instead of quantity of care, also has reduced costs. There are about 164 accountable care organizations in operation, and hundreds of other insurers and health systems have taken steps to implement features of accountable care, the Times reports (Lowrey, New York Times, 4/28).

Costs Rise as Obesity Rates Increases

In related news, medical costs related to obesity have exceeded previous estimates by 200% and are higher than the costs related to smoking, according to new research by the Campaign to End Obesity, Reuters reports.

Meanwhile, a study published in January in the Journal of Health Economics found that obesity-related costs have added a total of $190 billion to total U.S. expenditures and accounts for 20.6% of medical spending annually.

According to Reuters, the "startling economic costs" of obesity, which often are paid by non-obese individuals through higher premiums, could become "the epidemic's second-hand smoke." Policymakers began to address the problems associated with second-hand smoke when scientists discovered that nonsmokers were developing lung cancer and other diseases as a result of being exposed to smoke-filled air.

The federal health reform law will allow employers to charge obese workers who do not participate in qualified wellness programs 30% to 50% more for their health benefits, according to Reuters (Begley, Reuters, 4/30).

Bett Martinez
susan, it might be illuminating for you to Google and track the work of David Eisenberg, MD, at Harvard. He's actually followed the money and published several articles in the Journal of the American Medical Assn. documenting how much is spent on CAM (Complementary and Alternative Medicine). Not sure if he's tracked flight from insurance. Many use a high deductible health plan with a reasonable out of pocket maximum to cover emergencies like car or bike accidents, broken bones and so on, that can be quite costly. The HSA account, funded by pre-tax dollars can be tapped also for many CAM expenses. Whether it's through taxes or premium, we're all contributing to a pool of money that will be there for us if we need it, and for the 7-year old with Diabetes 1 who, through a genetic defect, is costly to the whole system...
Theresa BrownGold
Health savings accounts have a built-in incentive for people NOT to seek out care. Sure, check ups might be covered. But then what happens if a problem is discovered? A person with an under-funded HSA might act like an uninsured person and not get treatment. They're just a bad idea as a solution to our healthcare crisis. HSAs are good for a sliver of the population. Insurance companies had to come up with a way for employers to lower premium costs. And they did it by shifting costs to the employees --HSAs
Susan Kidder
My first questions would be: how are we measuring this? Where do we get our data? If it's derived claims filed through insurance - let me give you another possibility to consider? I have spent $0 through the mainstream medical system over the last several years. I use an Integrative/Functional Medicine physician - and I pay cash. I carry no health insurance - reimbursable allopathic medicine simply doesn't cover any care I'm interested in receiving. It might be both interesting and illuminating to try to uncover the numbers for the money that's spent on "alternative medicine?" What you might discover is that many "consumers" are voting with their dollars - and with their feet. The mainstream medical system is not just "broken" in terms of access and entitlement. It's actually far more comprehensively dysfunctional - and increasing numbers of "consumers" have figured this out.

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