Study: U.S. Health Care Spending Began Slowing Before Recesssion

The amount spent on health care in the U.S. has been slowing for the last few years. In May, the growth in health care costs was the lowest in 20 years, and total health care expenditures have stabilized at around 18 percent of the economy since 2009. But the New England Journal of Medicine has published a new report from researchers at the Center for Sustainable Health Costs suggesting that the slowdown in health care spending started well before the recent recession. As the researchers explain:

Excess growth decreased from more than 3% during 2003 to less than 1% starting in July 2005 and continuing, for the most part, until near the end of the recession in June 2009. Excess growth exceeded 1% during the post-recession period, until May 2011, when it again dropped below 1%, going negative during the latter part of that year. If we use 1% as a threshold to denote moderation in excess health care spending, these data show that July 2005 marked the onset of moderation. Although the level of excess spending was above 1% for a few months in 2006, that was the year in which Medicare Part D prescription-drug coverage began and prescription-drug spending was a major driver of excess spending.

Here’s their chart:

As Wonkblog’s Sarah Kliff points out, the decline in medical spending might have more to do with delayed medical care rather than people completely forgoing treatments. The Wall Street Journal reports today that health care companies are seeing an uptick in checkups and outpatient visits, although hospitals stays are not increasing. And reforms included in Obamacare to make preventive services available without a co-pay could help encourage more people to visit their doctors before a serious problem arises.

Even with the reforms in the Affordable Care Act, health care costs as a whole in the U.S. are growing at an enormous rate and is projected to make up 40 percent of federal spending by 2037. It’s unclear if the low growth in spending will be low enough, according to the report’s authors, and “the answer depends on what we’re willing to pay in taxes and what we spend on items not related to health care.”