The Slowdown In Health Care Spending In 2009–11 Reflected Factors Other Than The Weak Economy And Thus May Persist

Abstract

During and immediately after the recent recession, national health expenditures grew exceptionally slowly. During 2009-11 per capita national health spending grew about 3 percent annually, compared to an average of 5.9 percent annually during the previous ten years. Policy experts disagree about whether the slower health spending growth was temporary or represented a long-term shift. This study examined two factors that might account for the slowdown: job loss and benefit changes that shifted more costs to insured people. Based on an examination of data covering more than ten million enrollees with health care coverage from large firms in 2007-11, we found that these enrollees' out-of-pocket costs increased as the benefit design of their employer-provided coverage became less generous in this period. We conclude that such benefit design changes accounted for about one-fifth of the observed decrease in the rate of growth. However, we also observed a slowdown in spending growth even when we held benefit generosity constant, which suggests that other factors, such as a reduction in the rate of introduction of new technology, were also at work. Our findings suggest cautious optimism that the slowdown in the growth of health spending may persist-a change that, if borne out, could have a major impact on US health spending projections and fiscal challenges facing the country.

Is the US “leading from behind” on health policy?

“…Of course, Europe has experienced its own moderation in health costs and has seen its own structural changes. However, US experiences are worth noting and might even serve as models for European experimentation, particularly in delivery reforms, the use of incentives to encourage cost-effective care and the move to patient-centeredness [39].…”

Health Spending For Low-, Middle-, And High-Income Americans, 1963–2012

“…[2][3][4][5][6][7][8][9] Although cyclical (i.e., recessionrelated) factors could result in the observed income-related trends in health spending, the divergence in spending appears to pre-date the Great Recession by several years. 1 Some structural changes, including greater provider efficiency and fewer expensive "blockbuster" pharmaceuticals entering the market, would be expected to affect all income groups uniformly.…”

“…Other structural changes -particularly increased cost-sharing for the privately insured -would be expected to have a greater impact on low-and middle-income people, consistent with our findings. Cost sharing and depressed income among the poor and middle class may explain why spending by the privately insured dropped after 2008, 6 and why regions of the U.S. most affected by the Great Recession experienced the slowest growth in health spending for the privately insured between 2007 and 2011. 2 A mix of cyclical and structural factors -the lingering effects of the Great Recession on nonwealthy households and increased cost sharing -seems the best explanation for the rising income-based spending disparities we observed.…”

Red-State Medicaid Expansions — Achilles’ Heel of ACA Repeal?

“…Whatever the mechanism, there is empirical evidence that the Great Recession reduced the growth of per enrollee health care spending in employer coverage in its immediate aftermath. Ryu et al (2013) find that the recession increased cost sharing in employer coverage and estimate that those increases subtracted around 1 percentage point per year from the growth of per enrollee health care spending in employer coverage in both 2010 and 2011, with smaller reductions in earlier years. Similarly, Dranove, Garthwaite, and Ody (2014) compare growth in per enrollee spending in employer coverage in metropolitan statistical areas that experienced larger and smaller reductions in employment during the Great Recession.…”