Health Spending Rose 3.7% in 2012

Health care spending rose by just 3.7 percent in 2012, the fourth consecutive year of slow growth, as spending continued to reflect the impact of the recent economic recession, the Centers for Medicare and Medicaid Services (CMS) said Jan. 6. In a report published in the January issue of the journal Health Affairs, CMS said health spending in 2012 reached $2.8 trillion, or $8,915 per person. The share of the gross domestic product devoted to health care fell from 17.3 percent in 2011 to 17.2 percent in 2012. Health care spending growth has remained stable since 2009, rising between 3.6 percent and 3.8 percent annually. Health care spending has risen much faster in the past, increasing 9.7 percent in 2002, for example, according to the report. The agency in September 2013 said health care spending is expected to continue growing at historically low rates in 2013 before rising faster in the coming years as the Affordable Care Act (ACA) is implemented, the economy improves, and more baby boomers enroll in Medicare. The ACA has had a minimal impact on health care spending growth from 2010 through 2012, the new report added. Researchers have said the recession is a major reason health spending has slowed recently, a conclusion shared by CMS in the report. “The relative stability since 2009 primarily reflects the lagged impacts of the recent severe economic recession,” the report said. “In particular, income and employment growth was modest over this period, and there was a slow recovery from private health insurance enrollment losses that occurred during 2008-10.” Enrollment in private health insurance plans reached 188 million in 2012, an increase of 800,000 from the previous year, but enrollment was still 9.4 million lower in 2012 than in 2007, before the recession began, CMS said. “This declining enrollment was a major factor in the slow growth in overall private health insurance spending over the past several years,” the report said. For 2012, faster growth in hospital, physician, and clinical services was offset by slower growth in prices for prescription drugs and nursing home services, according to CMS. Spending on hospital care rose 4.9 percent in 2012, up 1.5 percentage points from 2011, while spending for physician services grew by 4.6 percent in 2012 because more people visited their doctors as the economy improved, CMS said.Medicare spending rose 4.8 percent in 2012, compared with 5 percent a year earlier. Takeaway: Health care spending continues to grow at historically low rates due in part to the recession of 2008-2010. Growth is expected to rise in coming years.