For the first time in decades, U.S. prescription drug spending dropped last year — a phenomenon largely stemming from the fact that, faced with spiraling health costs, Americans are being forced to cut back on their care wherever they can.

According to a new report from IMS Institute for Healthcare Informatics, the nation’s total spending on prescription medications dropped from $329.2 billion in 2011 to $325.8 billion last year. Similarly, the average amount that each American spent on their medications in 2012 fell to $898, representing a decline of $33. This is the first time the IMS has recorded a drop in drug spending in the 58 years that the institute has been monitoring the data.

Part of the decline is due to more cheaper, generics drugs entering the market, a positive trend that helps Americans better afford their medication and ultimately lowers health costs. But that’s not the whole story. According to the IMS’ director of research, Michael Kleinrock, many Americans are skipping out on their prescriptions because they’re struggling to afford all of their medical costs, and are therefore being forced to ration their health care:

IMS found affordability of health care remains a big problem for many Americans, with growing out-of-pocket costs forcing people to go without needed doctor visits, medicines and other treatments.

For some, that was because they lost jobs or homes during the worst recession in decades. But higher costs also are hitting many employed people who have health insurance.

Employers have been raising health costs for their workers well above the inflation rate, through higher copayments, premiums and deductibles. Many commercial insurance plans now have annual deductibles — the amount a patient must pay before insurance kicks in — that exceed $1,000, Kleinrock said. [...]

“Even patients with insurance are feeling the pinch and have been reducing their use of health care,” Kleinrock said.

IMS’ findings are consistent with other studies that have found that low-income Americans are forgoing their medication because they can’t afford it. One out of every five Americans has asked their doctor to prescribe a cheaper medication in order to lower their prescription costs — and, compared to wealthier people, poorer patients are more than twice as likely to avoid taking their medication as directed in order to save money.

Of course, as Americans continue to struggle to afford their prescription drugs, Big Pharma is reaping the benefits. The 11 largest drug companies’ profits have been soaring for the past eight years, and they raked in almost $85 billion in 2012.

Unfortunately, profiting at the expense of workers isn’t exclusive to Big Pharma. As Kleinrock notes, even the Americans who currently have insurance are now being forced to cut back on their care, since their employers continue to shift more of their health care costs onto them. Across the country, employees’ contributions to their health insurance plans have skyrocketed at the same time as those workers’ wages have stagnated. That’s especially true for the low-wage workers who are employed by large chain companies in the restaurant industry, whose CEOs have repeatedly complained about the cost of providing adequate health benefits under Obamacare — and keep attempting to find unscrupulous ways to circumvent the health reform law.

Looks like Obamacare is more “on track” than “train wreck.”

In a striking illustration of the promise that the health law holds for consumers, two Oregon private insurers vying to sell coverage on the state’s Obamacare insurance marketplace this October are reevaluating their opening bids for the plans’ monthly premiums. The reason? A side-by-side regional comparison of all proposed 2014 premiums for Oregon marketplace plans became public on Oregon’s marketplace website Thursday, and showed that the two insurers’ planned monthly premiums were far higher than other proposals. That raised fears among the companies’ officials that their plans wouldn’t be competitive on the market later this year, leading them to proactively request a rate reduction — and as more of Obamacare is implemented, state insurance commissioners expect that trend to continue:

“Posting rate comparisons company-by-company is a taste of what is to come,” says Cheryl Martinis of the Oregon Insurance Division.

Judging by the reaction, there’s already an impact.

Providence Health Plan on Wednesday asked to lower its requested rates by 15 percent. Gary Walker, a Providence spokesman, says the “primary driver” was a realization that the plan’s cost projections were incorrect. But he conceded a desire to be competitive was part of it.

A Family Care Health Plans official on Thursday said the insurer will ask the state for even greater decrease in requested rates. CEO Jeff Heatherington says the company realized its analysts were too pessimistic after seeing online that its proposed premiums were the highest.

“That was my question when I saw the rates was, ‘Can we go in and refile these?’” he said. “We’re going to try to get these to a competitive range.”

Although some insurers have been using Obamacare as an excuse to hike premiums despite record profits, such rate hikes have been rarer — and less extreme — since the law’s passage. And to emphasize, this is all happening before the state has had a chance to review and approve initial plan rates — much less launch the actual marketplace. After the exchange opens up, consumers will have even more detailed information about marketplace plans, including the ability to compare — not just rates — but actual benefits offered on the plans side-by-side.

That’s particularly significant because much of the current variation in health plan premiums stems from rampant health care price opacity and wildly divergent benefits offered on different health plans — a status quo that won’t last in the Obamacare era since the law requires qualifying insurance plans to offer a base level of ten “essential health benefits,” including prescription drug, mental health, and maternity services. That means that Americans will be able to go online and figure out whether a plan costs more because it actually provides more robust benefits, or because an insurance company is just trying to gouge prices and maximize profits. Insurance offered on the marketplaces will be separated into Bronze, Silver, and Gold plans based on how generous their offered coverage is, making consumer comparisons between similar health plans simple.

As Thursday’s development shows, that public information empowers consumers by forcing insurers to compete with one another to attract customers. Or to put it another way — and contrary to conservative fear-mongering about the law — Obamacare is working exactly as it was intended to. And with 24 million Americans expected to gain coverage through the marketplaces by 2016, that’s great news for Americans’ pocketbooks — as well as their health.

One of the most important ongoing stories in the realm of budgets and health care economics is the remarkable drop in how much health care costs are projected to grow over the next decade. Back in March, David Cutler and Nikhil Sahni released some preliminary work arguing that, thanks to this slowdown, projections of government spending on health care for the next decade were overshooting by hundreds of billions of dollars. Now they’ve released a more complete paper (gated) with a specific number: if the lower growth rate continues, the federal government could save $770 billion by 2021. Furthermore, Cutler and Sahni concluded that as much as 55 percent of the slowdown has been driven by factors other than the recession.

That last point is especially important. If the slowdown in growth is due to the recession, then it’s temporary. Health care costs will once again rise at their previous rate once the economy recovers, driving health-related spending to ever greater heights and further straining the budgets of both the government and American families. But if the slowdown is due to deeper, structural changes in health care markets, then at least some portion of the slowdown may be long-term. And the government’s projections of future debt and deficits rely heavily on those previous assumptions of high health care cost growth. So if the slowdown sticks, the outlook for America’s fiscal future could improve radically, all without lawmakers cutting a dime.

Here’s Bloomberg with a nice summary:

Cutler’s research compared the U.S. government’s growth projections for health spending from 2004 to 2012 with actual increases in the period. It found that the real growth rate was about half of the government’s prediction, leading to a gap of more than $500 billion in 2012 between the projections and spending.

The paper calculates that the recession accounted for about 37 percent of the slowdown in health costs from 2003 to 2011. Declining private insurance coverage and cuts in payments byMedicare, (USBOMDCR)the government health plan for the elderly and disabled, accounted for another 8 percent and the remaining 55 percent is “unexplained,” Cutler wrote. That’s where the structural changes come in, he said.

If the current lower-than-expected rate of growth continues, the country may reap savings of as much as $770 billion through 2021, the research found.

As always, there’s a lot of uncertainty built in here. Another recent study by Kaiser, for instance, suggested that as much as 77 percent of the slowdown is a temporary result of the recession. Also, there’s a lot of complexity in the category of “structural” changes. Some of it’s improvements in the efficiency of health care delivery, quite possibly thanks to reforms in Obamacare that encourage providers to change the way they do business. Other parts of it may be one-time shifts in the market, such as the rise of generic drugs to replace more high-cost brand-name medicines.

The broader point, however, is that there are more ways to balance the budget than just slashing the aid and benefits Americans need to buy. A better-designed health care system could very well deliver lower and more efficient government spending than austerity ever could.

The Center for Medicare and Medicaid Services (CMS) released highly-anticipated data on Wednesday that outlines what hospitals across America charge for common inpatient medical services. The takeaway from the new numbers? There is no rhyme or reason to what different hospitals charge for the same procedures across geographic regions (or even within the same region), and prices can fluctuate by over $100,000 in the most extreme cases.

The CMS data is comprised of charge records from over 3,300 hospitals spanning 306 localities, and detail the costs of many of the most common inpatient procedures, such as treatments for heart failure, chest pain, respiratory infections, and lower limb replacements. The Huffington Post has a helpful graphic mapping the prices that hospitals throughout the New York and New Jersey areas charge patients for treating chronic obstructive pulmonary disease (COPD), which helps illustrate just how significant the disparities can be:

These numbers confirm a recent Time Magazine investigative report that found much of the same trend throughout the U.S. And the biggest victims of this rampant price variation — and apparent price-gouging — are the poor, the uninsured, and the underinsured. Public entitlements such as Medicare are relatively protected, since the government has the power to negotiate blanket prices and reimbursement rates for specific services. But private insurers — and, of course, the uninsured — don’t have that same capacity, making them subject to the whims of the hospitals they do business with. In essence, that means that poor people’s medical and financial stability are left up to pure luck, dependent on whether or not the hospital they visit charges reasonable rates.

As Obama Administration officials explained, there isn’t any feasible economic reason for this cost variation — and reformers are hoping that the publication of the data will shame hospitals into changing these practices and acting in good faith:

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A new study published in the Journal of the American Medical Association (JAMA) Internal Medicine raises a provocative question: can patients’ religious faith — and the spiritual support given to them by their caregivers — influence their decisions on end-of-life medical services and health care spending? The short answer, according to researchers’ findings, is yes — with some caveats.

Dr. Tracy Balboni of Dana-Farber Cancer Institute in Boston led the new study, which tracked 343 Americans with advanced cancers from its launch in 2002 up through their deaths. The results were striking. Compared to those who reported a lower level of spiritual support, the 43 percent of study participants who reported “high spiritual support” from religious communities were about a third as likely to receive end-of-life (EoL) hospice care, over two and half times more likely to to receive some form of aggressive — and expensive — EoL service (like being put on a ventilator or pursuing additional chemotherapy), and five times more likely to die in a hospital ICU in their last week of life.

Furthermore, patients who self-reported the highest levels of “religious coping” during their final days were 11 times as likely to receive aggressive EoL treatments and 22 times more likely to die in the ICU compared to those with lower levels of religious coping. Those numbers were also elevated for minority populations, particularly African Americans, who are among America’s most religious ethnic groups.

So what’s at the root of these notable trends — and what lessons do they hold for doctors who want to provide their patients with the best care while also reducing the number of unnecessary procedures they must undergo in their last days? Researchers speculate that the numbers may have something to do with religious Americans’ belief in a higher power and the prospect of God working through medical professionals. “One possibility is that religious people consider medicine to be a primary means of divine intervention,” wrote Balboni and her colleagues. They also mused that strong religious community support could foster the desire to “persevere” through “hope found within suffering” — in essence, the mettle to refuse to call it quits.

But as the study’s findings on these religious community-supported patients’ ICU death rates shows, channeling that faith-based will to live into aggressive medical care isn’t necessarily effective — and, to be blunt, it contributes to wasteful health care spending by Americans and public entitlement programs such as Medicare. EoL hospice care isn’t a huge proportion of total health care spending — but aggressive medical interventions for chronically ill elderly Americans on the cusp of death is, with the top five percent of such patients accounting for over $600 billion in health spending every year.

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Ever since the Supreme Court gave Obamacare its constitutional blessing last summer, few Obamacare provisions have elicited as much ire from conservative critics and some in the business community as the requirement that large employers provide health coverage to all employees who work for 30 hours or more per week. Employers are now engaged in a concerted effort to force Congress to ease this worker protection, essentially presenting lawmakers with an ultimatum: loosen the relevant Obamacare rules, or we’ll continue to slash workers’ hours to avoid paying for their health coverage. In fact, this policy battle underscores the innate risks of America’s system of employer-sponsored health coverage.

First, it’s important to note that retail and service-sector employers such as Denny’s and Olive Garden — while making some of the biggest splashes about the Obamacare requirement — are not alone in their frustrations. Citing cost concerns, nonprofits such as charities and city and state governments have also joined the push to change the health law’s mandates for hourly waged workers (although the vast majority of large employers in general plan to keep providing health coverage after Obamacare implementation).

To be clear, these Americans will still be able to access insurance coverage under Obamacare regardless of their employers’ actions, either through Medicaid (if their state decides to participate in the reform law’s optional expansion) or by receiving federal subsidies to purchase insurance on Obamacare’s statewide exchanges. For instance, a part-time worker earning $15,000 per year would only have to pay $300 in annual premiums, with the remaining $2,718 covered by government tax credits. Still, reducing such part-time workers’ hours amounts to a pay cut for low-income Americans, giving employers formidable leverage in their dealings with Congress. And that very leverage — as well as employers’ generally outsized influence over their workers’ health care — is a direct consequence of employer-sponsored insurance (ESI).

American health care didn’t always work this way. In fact, a 2009 NPR foray into the history of ESI found that the modern system took root through a series of historical accidents and ad hoc responses to world events. At the turn of the 20th century, medical services were mostly cheap and procurable through cash or bartering — and the average American’s annual health costs were little more than $100 in today’s currency. But as innovation in health care technology began driving care prices up, individuals’ ability to pay for it began to dwindle, leading Americans to only consume care when they got sick while forgoing checkups and preventative services. The advent of medical insurance was born out of hospitals’ efforts to reverse this trend, as Baylor University Hospital began providing Dallas-area teachers with a monthly premium-driven insurance plan that would come to be called “BlueCross.” While this was limited to teachers at the time, the idea caught on — and by the time World War II came around, employers began offering benefits like health coverage as a way to lure workers during an era of sky high demand for good labor.

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According to a new study commissioned by Bank of America Corp’s Merrill Lynch, health problems and health care are the top concerns for the Americans who are approaching retirement. Even among wealthier Americans — defined in this survey as those who have more than $250,000 in investable assets — health care expenses represent the most pressing financial concern they anticipate having during their retired years.

When asked to rank their financial worries for retirement, respondents overwhelmingly selected health care expenses as their biggest concern. Over 50 percent of the Americans in the wealthier group, as well as nearly 40 percent of those who were defined as less wealthy, said they were most worried about struggling to afford their health costs:

Health problems, rather than financial success, were also ranked as the top reason that the retired respondents decided to stop working. That could point to the fact that many Americans aren’t saving up as much money as they would like to before retiring. That’s consistent with previous research that shows that the Great Recession has negatively impacted older Americans’ ability to retire. Almost two-thirds of working Americans now report they’re planning to delay their retirement, and most Americans say they’re putting off retiring so they can continue to access health benefits through their employer-sponsored insurance plans.

Medical costs have been soaring across the entire health care sector — and, since end-of-life care is typically expensive, that trend especially impacts retired seniors. The median cost of living in a nursing home is now more than twice as much as a private college tuition. High medical costs end up bankrupting one in four U.S. seniors, despite the coverage offered under Medicare.

Pentagon officials circulated a memo to military leaders on Thursday blaming delays to military families’ health care referrals on UnitedHealth Group, the nation’s largest private insurance provider. The delays led the Defense Department to take the unusual step of granting temporary waivers “so the plan’s members in the western region could get specialty care without UnitedHealth’s authorization and not incur penalties.”

In April, UnitedHealth took over a contract that serves beneficiaries enrolled in the Tricare Prime program in the western United States. Tricare ensures that nearly 10 million active duty personnel, retirees, reservists and their families have access to health benefits; the Tricare Prime program itself is a subset of that entitlement, pairing beneficiaries with “a primary-care manager responsible for referring patients to specialists for necessary services.”

However, those specialist referrals are contingent on the insurance provider’s — in this case, UnitedHealth’s — approval. The trouble is, the insurer has been falling behind in approving those referrals, leaving many military families in limbo while waiting for their care. And while UnitedHealth spokespeople claim they were simply overwhelmed by an unexpected number of referral requests, others argue that they were aware that this exact problem would arise, and should have been prepared to deal with it:

The delays are occurring because UnitedHealth has received requests for referrals and care authorizations that “far exceeded the norms” since it took over the contract, said Bruce Jasurda, a spokesman for the company.

“The increased volume was driven largely by people asking whether previously authorized referrals and authorizations were still valid, resulting in large numbers of duplicate referrals in the system,” Jasurda said in a phone interview. The company “understands the issues we need to improve on, and we are taking aggressive action.” [...]

U.S. Representative Doug Lamborn, a Colorado Republican, said in a letter to Defense Secretary Chuck Hagel yesterday that health-care providers in his state are facing “unexpected and dramatic reductions in their workload” because of the backlog in referrals. He also blamed UnitedHealth.

“They claimed to be aware of the problem and doing what was necessary to get on top of the problem,” Lamborn said in a phone interview. “There seemed to be a disconnect from the reality on the ground.”

Specialty care encompasses a broad swath of medical services, ranging from urgent care surgical procedures to treating autoimmune disorders — so UnitedHealth’s delays were, in essence, preventing military families from getting anything other than primary and preventative care until Thursday’s Pentagon waiver was issued. That’s especially problematic considering that many military families’ health needs fall outside the realm of primary care.

And when it comes to Tricare, specifically, beneficiaries certainly don’t need additional hassles from insurance companies. The program’s outsized spending on retiree — as opposed to active — enrollees’ benefits has led Pentagon officials to call for raising veterans’ out-of-pocket health costs. So far, Congress has found such a proposal too politically unpalatable to adopt — but given the reality of the numbers, their resistance may not last much longer.

California Insurance Commissioner Dave Jones on Wednesday slammed UnitedHealth Group — the nation’s largest private insurance company — over its decision to cut benefits and raise premiums for health plans used by close to 5,000 California small businesses. The combination of cuts and hikes would amount to a nearly eight percent rate hike for small business owners and their employees.

“At a time when small businesses are struggling to survive, UnitedHealthcare’s rate increase is just one more unwarranted economic burden on California’s small business owners and their employees,” said Jones. He estimated that close to 45,000 small business employees could be affected by the hikes.

Jones’ comments were quickly dismissed by UnitedHealth, as a spokesman argued that the annual increase would merely be two percent for customers. But that two percent figure likely only take into account the requested premium rate hike, not the cuts to benefits provided on relevant health plans. Previous, seemingly-arbitrary rate hikes by UnitedHealth and other insurers have led Jones to become a vocal advocate for greater insurance commission authority on the issue, and he has been pushing for the passage of a 2014 popular referendum that would “grant state officials the power to reject unreasonable rate increases for health coverage.”

This certainly isn’t the first time that UnitedHealth has engaged in profit-seeking behavior at the expense of government and employer health expenditures and workers’ benefits. The company recently complained that it wasn’t receiving enough government money despite massive profits and favorable Medicare reimbursement rates, and is one of several companies using Obamacare as a scapegoat for its extravagant rate increases.

In fact, arbitrary rate increases were par-for-the-course long before Obamacare’s passage, and the reform law actually contains protections against sticker shock and fallback measures for Americans who cannot afford private insurance coverage. But given UnitedHealth’s and other insurers’ quests for ever-increasing profits, many state insurance commissioners are looking to more closely scrutinize rate requests to see if they are reasonable.

Last month’s bombings at the Boston Marathon left three people dead and about 260 people injured, including about 25 victims who had to get limbs amputated. Initial estimates suggested that the total medical costs of treating the survivors could exceed $9 million. Luckily, in order to help ensure that the survivors can afford their treatment, insurance companies and hospital administrators have announced they will help out by waiving most of the medical costs for them.

And now, the bombing victims with particularly serious injuries may also get some relief for their artificial prosthetics — which aren’t necessarily completely covered by insurance. The American Orthotic and Prosthetic Association, a trade group that represents companies that make artificial limbs, has promised to provide some prosthetics free of cost to the people who underwent amputations after the bombings:

The association’s offer, announced on a conference call with reporters under the name Coalition to Walk and Run Again, will only cover a portion of the expected costs for amputees. Victims who lost both legs face estimated medical bills of $450,000 over the next five years, said Tom Fise, executive director of the association, citing a Department of Defense and Veterans Affairs study.

The association estimates that at least half the Boston Marathon amputees lack enough insurance to cover their prosthetic costs as some policies provide as little as $1,000 per device or only provide one artificial limb. Many prosthetics need replacing every five to seven years.

“The last thing that someone should have to worry about when they lose … a leg is to have adequate insurance coverage for a prosthetic device,” said Kendra Calhoun, president of the Amputee Coalition, an organization supporting the estimated 2 million amputees in the United States.

Since the attacks at the Boston Marathon, support has poured in for the victims, many of whom had their lower extremities blown off by the explosions. The One Fund, a relief group established by Massachusetts Gov. Deval Patrick and Boston Mayor Tom Menino, has collected about $27 million in donations that it plans to distribute to the survivors and their families. Upcoming marathons in other cities are planning to organize donations for the One Fund. There are also several other celebrity-backed general funds soliciting aid for the victims, as well as individual efforts to raise money for particular survivors with serious injuries.