Healthcare costs rose 6% last year, the slowest growth rate in 30 years, and are expected to rise 7% this year, according to a new report by the Congressional Budget Office.
The primary reason for the slower rate of growth has been the expansion of managed care, the CBO said.
"Since about 1990, the market domination of traditional fee-for-service health insurance has shrunk, and the emergent managed-care plans, taking advantage of the excess capacity that fee-for-service insurance has encouraged, have helped touch off a hotly competitive response to the problems of the health economy," the CBO report said.
The CBO did not predict whether the slower growth rates would be permanent, but it did note that slowdowns in the 1970s and 1980s were temporary.
The report includes two growth scenarios. Under the first, health spending would grow by about 8.5% a year through 2005. Under the second, which assumes managed care continues to hold down costs, growth would be held at about 6.9% a year.
The report projected that Medicare and Medicaid spending would increase about 10% a year, absent any congressional changes.
The GOP budget passed earlier this year called for Medicare spending growth to be held at 6.4% a year, while Medicaid spending would rise 4.8% a year.