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March 31, 2014 01:00 AM

New data do little to reveal reason behind healthcare spending slowdown

Melanie Evans
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    Two new snapshots of health spending do little to resolve the heated debate over whether a sharp slowdown that followed the Great Recession will last as the economy rebounds.

    New data from the federal Bureau of Economic Analysis for the final three months of last year show health spending accelerated—and more sharply than two prior estimates suggested—after a period of historically slow growth, an Altarum Institute analysis of BEA and additional data found.

    Separately, the S&P Dow Jones Indices found that spending by 60 million individuals with commercial insurance slowed during the year that ended in November.

    These reports join a torrent of research, published and underway, looking into the question of whether the weak economy was the primary factor in the recent lull in health spending growth or whether slower spending is the result of new, more efficient approaches to healthcare delivery and financing. The question is a significant one to legislators, business owners and households because historically U.S. health spending has easily outpaced the nation's economic growth. It is also a question that remains unanswered.

    “The debate will rage on,” said Paul Hughes-Cromwick, a senior health economist with the Altarum Institute. “There's no easy way to resolve that.” But last year's Bureau of Economic Analysis data and the agency's preliminary figures for 2014 suggest an uptick in health spending unrelated to growth created by the Patient Protection and Affordable Care Act's expansion of insurance coverage, he said.

    Average monthly growth hovered below 4% as the economy struggled to gain footing, but began to accelerate last August, the Altarum Institute's analysis of federal data shows. For the final three months of last year, spending growth was 5.3%.

    “We were somewhat surprised,” said George Miller, an Altarum Institute fellow, particularly after preliminary estimates showed growth of 4.6%.

    Spending by those newly insured under the Affordable Care Act would not be captured until January when new coverage went into effect; the BEA data does not track health insurance premiums.

    Hughes-Cromwick said spending that exceeds 6% growth this year “will provide evidence that we're seeing something cyclical,” or related to the economic cycle. Growth of high-deductible health plans may contribute to more spending as the year ends, as households that have exhausted their annual deductible seek care before the new year brings new deductibles.

    The S&P Dow Jones Healthcare Claims Indices, which account for 40% of U.S. fee-for-service insurance claims, found that spending slowed during the year that ended in November to 3.5% compared with 4.9% for the same period the prior year. Inpatient costs increased 3.5%, a slowdown from 4.5% the prior year. Outpatient spending growth also slowed to 5.2% from 8%. For prescription drugs, spending increased 2.6%, compared with 2.9% a year earlier.

    Follow Melanie Evans on Twitter: @MHmevans

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