Are Health Care Costs Really Slowing?
A recent report from the actuaries at the Centers for Medicare & Medicaid Services (CMS) has the Washington community all atwitter because it may suggest that health costs are permanently slowing down. The CMS team found that health spending slowed in 2011 for the third year, growing no faster than the rest of the economy.
Health spending as a proportion of gross domestic product (GDP) has now remained stable from 2009 through 2011 at 17.9%, after increasing seemingly relentlessly for many years. If that pattern continues, it could have big implications politically and economically. The jury is still out, however, on whether the cause of the slowdown is the long, deep recession. As the CMS report’s authors point out, the recession certainly had some effect on the numbers. For instance, rising unemployment meant a decline in employer-based coverage, leading to many families seeking more economical ways of getting care or putting off treatment. And with economic uncertainty continuing, even well-insured households remain cautious about health spending.But the $64,000 question is whether there are also deeper structural changes taking place in health care that will carry over after the direct effects of the recession have disappeared. There are some reasons to be optimistic about deeper changes taking hold. For instance, the wider use of generic drugs encouraged by insurers is unlikely to reverse in better economic times. Moreover, hospitals and the medical profession today have a very different attitude toward systematic cost control and toward teams and networks than used to be the case. About 20% of all physicians are now employed by hospitals. That’s up 32% since 2000, according to the American Hospital Association’s most recent statistics. And there’s a growing acceptance by physicians of the need to work together in teams with an eye on both cost and better medical outcomes. Discover other reasons why we can't open the champagne yet. >>
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