CMS: Growth in health spending remains slow in 2010 & National Health Spending Grew Slowly In 2010

Tue Jan 17 18:08:52 PST 2012

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Chapter of the American Academy of Emergency Medicine

January 9, 2012

CMS: Growth in health spending remains slow in 2010

AHAnews.com
<http://www.ahanews.com/ahanews/jsp/display.jsp?dcrpath=AHANEWS/AHANewsNowAr
ticle/data/ann_010912_spending&domain=AHANEWS> 

U.S. spending on health care grew 3.9% in 2010 to $2.6 trillion, slightly
surpassing the record-low 3.8% growth in 2009, the Centers for Medicare &
Medicaid Services reported today. Spending for hospital care increased 4.9%
in 2010, down from 6.4% in 2009 and the fourth consecutive year of
relatively slow growth. Private health insurance spending for hospital
services, the largest share of spending for hospital care, grew 2.2% in
2010, down from 4.8% in 2009 and the smallest increase since 1996. Medicare
spending for hospital care grew 4.6% in 2010, down from 5.3% in 2009, while
Medicaid spending grew 11.2% in 2010, up from 10.4% in 2009. Private health
insurance premium growth outpaced growth in underlying health care costs.
According to the report, consumers continued to postpone medical care in
2010, as demonstrated by a decline in median inpatient admissions and slower
growth in emergency department visits, outpatient visits and outpatient
surgeries. The report appears in the January issue of Health Affairs.

January 9, 2012

National Health Spending Grew Slowly In 2010

Kaiser Health News
<http://www.kaiserhealthnews.org/Stories/2012/January/09/2010-health-care-sp
ending.aspx> 

National health care spending grew slowly for the second consecutive year in
2010, bringing it in line with growth in the U.S. economy, the Department of
Health and Human Services reported Monday.

Spending grew by 3.9 percent in 2010, to $2.6 trillion, while the gross
domestic product increased 4.2 percent, according to the agency, which
published its findings in the journal Health Affairs. In 2009 spending
increased 3.8 percent. By contrast, in 2007, it grew by 7.6 percent.
Spending increases sometimes reached double digits in the 1980s and 1990s.

While spending growth overall remained slow, for the first time in seven
years premiums for people in private insurance plans grew faster than what
was spent on their care, according to the Centers for Medicare and Medicaid
Services. Premiums in 2010 rose 2.4 percent, slightly lower than the 2.6
percent increase in 2009. But private health insurers' spending on actual
benefits rose only 1.6 percent in 2010. That's down from 3.7 percent in
2009.

The recession had a lot to do with the trend, CMS officials said. With fewer
people insured, and private insurers generally picking up less of the cost,
patients went to the doctor and hospital less.

Karen Ignagni, president of America's Health Insurance Plans, said that the
portion of premiums "allocated to health plans administrative costs was
among the lowest in recent years, despite the fact that health plans have
been incurring new compliance and regulatory costs related to the health
care reform law."

Spending on prescription drugs also declined in 2010. Not only did
individuals buy fewer drugs, but there were also more switches from brand to
lower-cost generic medications. Moreover, CMS noted that fewer new drugs
came onto the market.

Two health care analysts, however, said that the explanation may go beyond
the recession. "The utilization slowdown is at least in part structural, and
not just cyclically driven by the economy, and the adoption of higher cost
sharing plan designs will result in some level of permanent slowdown in
trend," said Ana Gupte, a senior analyst at Sanford Bernstein, which
conducts research for investors.

Tom Miller, resident fellow at the American Enterprise Institute, said that
the trend is worth watching since it has continued more than a couple of
years. "We may have broken the old dynamic, where there's an ingrained force
that says we will spend more on health care than we do on other things," he
said.

As in other areas of the economy, he said, people are checking their
spending on health care because they are faced with paying a greater share
of the cost. "This is more in balance with how we've pulled back on
consumption spending in other areas. Even this last remaining holdout has
begun to buckle, and it's been enough years to say the basic forces are
changing."

At the same time, there has been a shift in health care spending from the
private sector and the states to the federal government. The federal
government's share of total national health care spending increased from 23
to 29 percent between 2007 and 2010. Over the same time, business' share of
health care spending decreased from 23 percent to 21 percent, and spending
by state and local governments declined from 18 percent to 16 percent.

Again, CMS officials cite the recession; the federal government gave states
extra help to get Medicaid coverage to more uninsured people. The federal
government matches state spending on Medicaid, and, during the recession, it
stepped up its contributions. Still, total spending on Medicaid increased
7.2 percent in 2010, which is down from 8.9 percent growth in 2009.

Medicare spending grew 5 percent, which is slower than the 7 percent growth
the year before. The main reason, according to CMS, was that the health law
required the federal government to decrease payments to Medicare Advantage
plans. About a quarter of Medicare beneficiaries are enrolled in these
private insurance plans, and Medicare had been paying about 14 percent more
for people in these plans than in the traditional fee-for-service program.
The health law aims to equalize what the federal government pays for
beneficiaries in both programs.

As a result of the change, says Anne Martin, a CMS economist, enrollment in
Medicare Advantage plans increased more slowly in 2010, as beneficiaries
instead chose traditional Medicare, reversing a long-time trend. Following
several years of declines, enrollment in fee-for-service increased 1.5
percent, marking the highest growth rate since 2004. Enrollment in Medicare
Advantage, meanwhile, increased 5.6 percent in 2010, much less than the 10.5
percent growth in 2009.

Gupte, though, says that Medicare Advantage enrollment growth has increased
since then.

Marcus Williams &
Brian Potts MD, MBA
Managing Editors, CAL/AAEM News Service

Contact us at: calaaem.news.service1 at gmail.com

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