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Is This Time Different? The Slowdown in Health Care Spending.

ABSTRACT: Why have health care costs moderated in the last decade? Some have suggested that the Great Recession alone was the cause, but health expenditure growth in the depths of the recession was nearly identical to growth prior to the recession. Nor can the Affordable Care Act (ACA) take credit, since the slowdown began prior to its implementation. Instead, we identify three primary causes of the slowdown: the rise in high-deductible insurance plans, state-level efforts to control Medicaid costs, and a general slowdown in the diffusion of new technology, particularly for use by the Medicare population. A more difficult question is: Will this slowdown continue? On this question we are pessimistic, and not entirely because a similar (and temporary) slowdown occurred in the early 1990s. The primary determinant of long-term growth is the continued development of expensive technology, and there is little evidence of a permanent slowdown in that pipeline. Proton beam accelerators are on target to double between 2010 and 2014, while the market for heart-assist devices (costing more than $300,000 each) is projected to grow rapidly. Accountable care organizations (ACOs) and emboldened insurance companies may yet stifle health care cost growth, but our best estimate over the next two decades is that health care costs will grow at GDP plus 1.2 percent, a rate lower than previous estimates but still on track to cause serious fiscal pain for taxpayers and workers who bear the costs of higher premiums.

SUBMITTER: Chandra A

PROVIDER: S-EPMC4237213 | biostudies-literature | 2013

REPOSITORIES: biostudies-literature

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Is This Time Different? The Slowdown in Health Care Spending.

Chandra Amitabh A Holmes Jonathan J Skinner Jonathan J

Brookings papers on economic activity 20130101

Why have health care costs moderated in the last decade? Some have suggested that the Great Recession alone was the cause, but health expenditure growth in the depths of the recession was nearly identical to growth prior to the recession. Nor can the Affordable Care Act (ACA) take credit, since the slowdown began prior to its implementation. Instead, we identify three primary causes of the slowdown: the rise in high-deductible insurance plans, state-level efforts to control Medicaid costs, and a ...[more]

PMID: 25418992

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Project description:ImportanceAfter decades of rapid increase, Medicare per-beneficiary spending growth was historically low in the period leading up to the passage of the Affordable Care Act. In the years immediately following the legislation, Medicare expenditure growth slowed even further.ObjectiveTo evaluate factors contributing to the slowdown in Medicare per-beneficiary spending growth.Design, setting, and participantsIn this cross-sectional study, expected spending growth for 2012 to 2015 and 2016 to 2018 was predicted holding payment rates and population characteristics constant. By contrasting predicted and actual spending growth during these periods, the contribution of population vs payment factors to the Medicare spending slowdown was determined. Analyses included all Medicare fee-for-service beneficiaries aged 65 years and older, ranging from 30 to 35 million beneficiaries annually between 2007 and 2018. Data analyses were conducted from January 2018 to August 2018 and updated with new data in June 2021.Main outcomes and measuresThe main outcome included annual growth in total per-beneficiary spending. The roles of payment rate changes and differences in the Medicare population over time were considered, including demographic characteristics and numbers of chronic conditions.ResultsBetween 2008 to 2011 and 2012 to 2015, the adjusted annual Medicare Parts A and B per-beneficiary spending growth rate declined from 3.3% to -0.1%. From 2016 to 2018, the mean annual Medicare spending growth rate rose relative to the previous period but remained lower than in the baseline period at 1.7% per year. This slowdown extended across all sectors within Parts A and B, except for physician-administered drugs offered under Part B. Changes in payment rates (including sequestration measures) and beneficiary characteristics explained 44% of the difference in overall per-beneficiary spending growth between 2007 to 2011 and 2012 to 2015, and 63% between 2007 to 2011 and 2016 to 2018.Conclusions and relevanceIn this cross-sectional study of trends in spending growth per Medicare beneficiary aged 65 years or older, results suggested that Medicare payment policy, including sector-specific payment rate changes and sequestration, will be a critical determinant of whether the Medicare spending growth slowdown persists.

Project description:Importance:US health care spending has continued to increase and now accounts for 18% of the US economy, although little is known about how spending on each health condition varies by payer, and how these amounts have changed over time. Objective:To estimate US spending on health care according to 3 types of payers (public insurance [including Medicare, Medicaid, and other government programs], private insurance, or out-of-pocket payments) and by health condition, age group, sex, and type of care for 1996 through 2016. Design and Setting:Government budgets, insurance claims, facility records, household surveys, and official US records from 1996 through 2016 were collected to estimate spending for 154 health conditions. Spending growth rates (standardized by population size and age group) were calculated for each type of payer and health condition. Exposures:Ambulatory care, inpatient care, nursing care facility stay, emergency department care, dental care, and purchase of prescribed pharmaceuticals in a retail setting. Main Outcomes and Measures:National spending estimates stratified by health condition, age group, sex, type of care, and type of payer and modeled for each year from 1996 through 2016. Results:Total health care spending increased from an estimated $1.4 trillion in 1996 (13.3% of gross domestic product [GDP]; $5259 per person) to an estimated $3.1 trillion in 2016 (17.9% of GDP; $9655 per person); 85.2% of that spending was included in this study. In 2016, an estimated 48.0% (95% CI, 48.0%-48.0%) of health care spending was paid by private insurance, 42.6% (95% CI, 42.5%-42.6%) by public insurance, and 9.4% (95% CI, 9.4%-9.4%) by out-of-pocket payments. In 2016, among the 154 conditions, low back and neck pain had the highest amount of health care spending with an estimated $134.5 billion (95% CI, $122.4-$146.9 billion) in spending, of which 57.2% (95% CI, 52.2%-61.2%) was paid by private insurance, 33.7% (95% CI, 30.0%-38.4%) by public insurance, and 9.2% (95% CI, 8.3%-10.4%) by out-of-pocket payments. Other musculoskeletal disorders accounted for the second highest amount of health care spending (estimated at $129.8 billion [95% CI, $116.3-$149.7 billion]) and most had private insurance (56.4% [95% CI, 52.6%-59.3%]). Diabetes accounted for the third highest amount of the health care spending (estimated at $111.2 billion [95% CI, $105.7-$115.9 billion]) and most had public insurance (49.8% [95% CI, 44.4%-56.0%]). Other conditions estimated to have substantial health care spending in 2016 were ischemic heart disease ($89.3 billion [95% CI, $81.1-$95.5 billion]), falls ($87.4 billion [95% CI, $75.0-$100.1 billion]), urinary diseases ($86.0 billion [95% CI, $76.3-$95.9 billion]), skin and subcutaneous diseases ($85.0 billion [95% CI, $80.5-$90.2 billion]), osteoarthritis ($80.0 billion [95% CI, $72.2-$86.1 billion]), dementias ($79.2 billion [95% CI, $67.6-$90.8 billion]), and hypertension ($79.0 billion [95% CI, $72.6-$86.8 billion]). The conditions with the highest spending varied by type of payer, age, sex, type of care, and year. After adjusting for changes in inflation, population size, and age groups, public insurance spending was estimated to have increased at an annualized rate of 2.9% (95% CI, 2.9%-2.9%); private insurance, 2.6% (95% CI, 2.6%-2.6%); and out-of-pocket payments, 1.1% (95% CI, 1.0%-1.1%). Conclusions and Relevance:Estimates of US spending on health care showed substantial increases from 1996 through 2016, with the highest increases in population-adjusted spending by public insurance. Although spending on low back and neck pain, other musculoskeletal disorders, and diabetes accounted for the highest amounts of spending, the payers and the rates of change in annual spending growth rates varied considerably.

Project description:ImportanceUS health care spending has continued to increase, and now accounts for more than 17% of the US economy. Despite the size and growth of this spending, little is known about how spending on each condition varies by age and across time.ObjectiveTo systematically and comprehensively estimate US spending on personal health care and public health, according to condition, age and sex group, and type of care.Design and settingGovernment budgets, insurance claims, facility surveys, household surveys, and official US records from 1996 through 2013 were collected and combined. In total, 183 sources of data were used to estimate spending for 155 conditions (including cancer, which was disaggregated into 29 conditions). For each record, spending was extracted, along with the age and sex of the patient, and the type of care. Spending was adjusted to reflect the health condition treated, rather than the primary diagnosis.ExposuresEncounter with US health care system.Main outcomes and measuresNational spending estimates stratified by condition, age and sex group, and type of care.ResultsFrom 1996 through 2013, $30.1 trillion of personal health care spending was disaggregated by 155 conditions, age and sex group, and type of care. Among these 155 conditions, diabetes had the highest health care spending in 2013, with an estimated $101.4 billion (uncertainty interval [UI], $96.7 billion-$106.5 billion) in spending, including 57.6% (UI, 53.8%-62.1%) spent on pharmaceuticals and 23.5% (UI, 21.7%-25.7%) spent on ambulatory care. Ischemic heart disease accounted for the second-highest amount of health care spending in 2013, with estimated spending of $88.1 billion (UI, $82.7 billion-$92.9 billion), and low back and neck pain accounted for the third-highest amount, with estimated health care spending of $87.6 billion (UI, $67.5 billion-$94.1 billion). The conditions with the highest spending levels varied by age, sex, type of care, and year. Personal health care spending increased for 143 of the 155 conditions from 1996 through 2013. Spending on low back and neck pain and on diabetes increased the most over the 18 years, by an estimated $57.2 billion (UI, $47.4 billion-$64.4 billion) and $64.4 billion (UI, $57.8 billion-$70.7 billion), respectively. From 1996 through 2013, spending on emergency care and retail pharmaceuticals increased at the fastest rates (6.4% [UI, 6.4%-6.4%] and 5.6% [UI, 5.6%-5.6%] annual growth rate, respectively), which were higher than annual rates for spending on inpatient care (2.8% [UI, 2.8%-2.8%] and nursing facility care (2.5% [UI, 2.5%-2.5%]).Conclusions and relevanceModeled estimates of US spending on personal health care and public health showed substantial increases from 1996 through 2013; with spending on diabetes, ischemic heart disease, and low back and neck pain accounting for the highest amounts of spending by disease category. The rate of change in annual spending varied considerably among different conditions and types of care. This information may have implications for efforts to control US health care spending.

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Is This Time Different? The Slowdown in Health Care Spending.

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Is This Time Different? The Slowdown in Health Care Spending.

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