Tags: US | Health | Spending | 2012

US Health Spending Rose 3.7 Percent in 2012

Monday, 06 January 2014 05:35 PM EST

U.S. healthcare spending rose 3.7 percent in 2012 to $2.8 trillion, the fourth year in a row in this range as the slow economic recovery tempered private insurance use, drug prices fell and the government held back payment increases for doctors, the Obama administration said on Monday.

Since 2009, increases in spending on healthcare have run from 3.6 percent to 3.8 percent, below pre-recession rates which have been falling since their peak in 2003, the report from the U.S. Centers for Medicare and Medicaid Services said.

"The relative stability since 2009 primarily reflects the lagged impact of the recent severe economic recession," Anne Martin, an economist in the Office of the Actuary at CMS said during a news briefing.

On average, the cost for medical care was $8,915 per person in 2012, up from $8,658 per person in 2011.

The report comes as more than 2 million Americans on Jan. 1 began receiving new coverage under President Barack Obama's healthcare reform law, commonly known as Obamacare.

The law, passed in 2010 and formally called the Affordable Care Act (ACA), aims to extend insurance to millions of previously uninsured or underinsured Americans through online exchanges that offer government subsidies based on income. It also expands the Medicaid program for the poor in nearly half of the states.

The report did not estimate how the ACA might affect 2014 spending, and the data for 2012 is the most recent official government information detailing expenditures for healthcare. Reining in that spending is seen as an important step toward tackling the U.S. budget deficit.

Obama's healthcare reform law had minimal impact on national health spending through 2012, the report said. One exception was in the Medicare program for seniors, where the ACA was responsible for reduced payment increases to doctors and hospitals in 2012, it said.

Jeanne Lambrew, a senior White House official responsible for healthcare policy, said in a blog post that the report is encouraging.

"While there is a debate about how much the Affordable Care Act has contributed to this health cost slowdown, there is no doubt that it reduced Medicare spending growth, and most experts believe that Medicare savings spill over into the private sector," Lambrew said.

She also pointed to how health spending is taking a smaller bite out of the economy. Healthcare spending accounted for 17.2 percent of gross domestic product in 2012, slightly down from 17.3 percent in 2011 when spending growth was 3.6 percent, according to the report.

"That's relatively stable because the change is subject to revision and also is less than a tenth of a percentage point," Martin said.

Spending on hospitals and physicians grew in 2012 but was offset by lower drug costs as cheaper generic versions hit the market, the report said. The growth of enrollment in Medicaid slowed, and Medicare spending growth increased at a slightly reduced pace.

Personal healthcare spending on goods and services, which accounts for 85 percent of the national total, grew 0.4 percentage point more in 2012 than in 2011's 3.9 percent rate.

Spending by consumers on services not covered by their insurance, or out-of-pocket costs, increased by 3.8 percent, the report said. That has occurred as employer-based insurance plans have increasingly asked consumers to pay a bigger share of the overall cost.

There were some signs that use by consumers of medical services increased in 2012 as spending on hospital services rose 4.9 percent, the report said.

Gary Claxton, a health economist at the Kaiser Family Foundation who was not involved in the study, said that 2013's healthcare spending growth is expected to have been similar to 2012 but that it is not clear what 2014 will bring.

"We are going to get some new coverage under the ACA, but a lot of it is going to have fairly steep cost sharing," Claxton said. "People have to pay more for themselves and they have fewer resources to do it with because the economy is tight."

© 2024 Thomson/Reuters. All rights reserved.

U.S. healthcare spending rose 3.7 percent in 2012 to $2.8 trillion, the fourth year in a row in this range as the slow economic recovery tempered private insurance use, drug prices fell and the government held back payment increases for doctors.
Monday, 06 January 2014 05:35 PM
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