Monday, January 7, 2013

Fwd: qotd: Growth of national health expenditures, 2011

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-------- Original Message --------
Subject: qotd: Growth of national health expenditures, 2011
Date: Mon, 7 Jan 2013 14:44:24 -0800
From: Don McCanne <>
To: Quote-of-the-Day <>

Health Affairs
January 2013
National Health Spending In 2011: Overall Growth Remains Low, But Some
Payers And Services Show Signs Of Acceleration
By Micah Hartman, Anne B. Martin, Joseph Benson, Aaron Catlin, the
National Health Expenditure Accounts Team


In 2011 US health care spending grew 3.9 percent to reach $2.7 trillion,
marking the third consecutive year of relatively slow growth. Growth in
national health spending closely tracked growth in nominal gross
domestic product (GDP) in 2010 and 2011, and health spending as a share
of GDP remained stable from 2009 through 2011, at 17.9 percent. Even as
growth in spending at the national level has remained stable, personal
health care spending growth accelerated in 2011 (from 3.7 percent to 4.1
percent), in part because of faster growth in spending for prescription
drugs and physician and clinical services. There were also divergent
trends in spending growth in 2011 depending on the payment source:
Medicaid spending growth slowed, while growth in Medicare, private
health insurance, and out-of-pocket spending accelerated. Overall, there
was relatively slow growth in incomes, jobs, and GDP in 2011, which
raises questions about whether US health care spending will rebound over
the next few years as it typically has after past economic downturns.

Out-Of-Pocket Spending

Faster growth in 2011 reflects higher cost sharing for group health
insurance plans and increased enrollment in consumer-directed health
plans that have higher deductibles, copayments, or both. Additionally,
increases in the number of uninsured people over the past few years had
resulted in more direct out-of-pocket spending than might otherwise have
been the case.


Slower growth in Medicaid spending reflected states' efforts to control
expenditure growth as the enhanced federal matching rates expired and
state revenues continued to increase at a slow rate. With fewer federal
matching dollars and continued pressure on their budgets, some states
implemented cost-control measures that included provider reimbursement
reductions, eligibility restrictions, benefit reductions, and increased
cost sharing.


Medicare spending for physicians' services also accelerated in 2011,
increasing 7.6 percent compared to 3.2 percent growth in 2010, even as
the increase in physicians' fees was lower in 2011. Faster
fee-for-service spending growth for physician services, therefore, is
attributable to a rebound in the volume and intensity of services after
unusually slow growth in 2009 and 2010.


In 2011 national health spending increased 3.9 percent—the same rate of
growth experienced in 2009 and 2010. The recent recession had an
immediate and noticeable effect on the health sector because of high
unemployment, loss of private health insurance coverage, and a reduction
in the resources available to pay for health care. All of these factors
contributed to historically low growth in aggregate health spending
during 2009–11.

In 2011, however, there were some signs of change, evident in faster
growth in nonprice factors such as the use and intensity of health care
goods and services. Additionally, insurance coverage expanded in 2011
for dependents under age twenty-six, and overall private health
insurance coverage did not decline as had been experienced in the prior
three years.

Nonetheless, economic, income, and job growth in 2011 was modest and
less than might normally be expected during an economic recovery. This
fact raises questions about whether the near future will hold the type
of rebound in health care spending typically seen a few years after a
downturn. Data for the years 2012 and 2013 will provide important
indications of the state of the US health system as the major insurance
expansions associated with the Affordable Care Act grow nearer on the


National Health Expenditures (NHE), 2011

$2,700.7 - NHE, billions

17.9 - NHE as percent of GDP

$8,680 - NHE per capita

In 2011, health care costs grew at the same rate as the growth in the
gross domestic product (GDP). Thus the recent severe recession and slow
recovery, plus the initial phase of implementation of the Affordable
Care Act, have not had a major impact on the growth of health care spending.

At a time when Medicare spending is under close scrutiny, especially for
potential opportunities to reduce the federal deficit, the fact that the
volume and intensity of services have increased disproportionately
warrants scrutiny. Physician behavior may drive reforms that could have
other consequences, favorable, or more likely unfavorable.

Shifts in Medicaid spending should raise red flags. More of the costs
are being shifted to states at a time that they are facing budget
crises. States are responding with measures such as provider
reimbursement reductions, eligibility restrictions, benefit reductions,
and increased cost sharing. These changes can result in greater
impairment of access just at a time when massive enrollment increases
are anticipated. This can have very serious consequences for a welfare
program that is already critically underfunded.

Out-of-pocket spending is increasing, especially due to an increase in
enrollment in consumer-directed health plans with high deductibles - a
market strategy to reduce health care spending by erecting financial
barriers to care.

Although reducing the increase in health expenditures down to the rate
of increase in the GDP sounds like good news, the trends behind the
numbers should have us all deeply concerned.

Need I say, a single payer...

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