The recession and weak recovery are by far the biggest culprits behind recent record-slow growth in health spending, according to a new analysis. The results suggest that any relief enjoyed by employers, households or state and federal budgets as the downturn dampened health spending could evaporate as the economy rebounds.
The analysis, by the Altarum Institute and published by the Kaiser Family Foundation, also suggest that it's premature to credit health policy and marketplace changes that have been widely cited as potential mechanisms to create a lasting slowdown in health spending that has historically grown faster than the economy, economists said.
“It's too early to tell whether the slowdown is permanent,” said Jonathan Skinner, an economist and health policy expert at Dartmouth College. Skinner is an adviser to the Altarum Institute. “Certainly, the results of this survey could suggest more caution in interpreting the slowdown as permanent.”
Initiatives by policymakers, hospitals, doctors and insurers to put a break on health spending—including new payment models such as accountable care and bundled payments—could someday show results, but are so far too new to have made much difference in recent years, said Paul Ginsburg, an economist and president of the Center for Studying Health System Change.
Accountable care, along with bundled payments, were among new payment policies included in the 2010 Patient Protection and Affordable Care Act that seek to tie reimbursement to performance and reduce health spending. Medicare last year expanded a test of accountable care that began in 2012 with 32 contracts; the agency now has 250 organizations with accountable care deals. Commercial insurers have also entered into contracts with financial incentives for controlling healthcare costs.
But so far, none of those initiatives appears to be what's driving significant and persistent cooling in the pace of health spending growth, according to Altarum's calculations. Rather, it's the economy.
The analysis said 77% of the slowdown in health spending between 2008 and 2012 was a result of the economic downturn. Health spending growth during those years grew 4.2% per year, on average, compared with 8.8% between 2001 and 2003.