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U.S. Health Care Spending Sees Modest Increases

June 13, 2012
Related Topics: Health Care Reform, Health Care Costs, Growth, Latest News
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Health care spending in the United States continues to rise only modestly as the lingering effects of the Great Recession and efforts to control costs have helped to hold down increases, according to a government report released June 12.

Researchers at the Centers for Medicare & Medicaid Services estimate that total health care spending rose 3.9 percent in 2011, the same as in 2010 and only slightly higher than 2009's 3.8 percent rise, which was the smallest increase in the more than 50 years the federal government has been collecting and analyzing such information.

The recent modest increases contrast sharply with the explosive growth in health care expenditures of just a few years ago.

From 2001 through 2003, increases in health care spending averaged nearly 9 percent. And as recently as 2007, costs leaped 6.2 percent.

But the low rate of spending in 2011, "largely reflects the lingering effects of the recent recession and modest recovery," the report notes.

For example, spending on physician and clinical services increased 2.7 percent last year, a slow growth rate that reflects "the enduring impact of the economic downturn, including continuing declines in patient visits to physicians … and slower price inflation for these types of services," according to the CMS report.

And the short-term outlook for health care spending increases also is favorable. CMS projects spending increases of 4.2 percent in 2012 and 3.8 percent in 2013.

Contributing to the modest growth in spending are employer efforts to control costs "through tighter management of care within health plans," the report said.

Timing also is a factor. Prescription drug expenditures, which increased 3.9 percent in 2011, are expected to rise 2.9 percent in 2012 and 2.4 percent in 2013 as several top-selling drugs lose patent protection and consumers shift to less expensive generic versions, according to CMS.

Meanwhile, national health care expenditures, which CMS says were 17.9 percent of GDP in 2011, are expected to stay at that level in 2012, and fall slightly to 17.8 percent in 2013.

Jerry Geisel writes for Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

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