Two Studies Find Cause for Optimism in Health Care Cost Growth

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Whether the slowdown in health care spending is just a silver lining to the overall slowdown in the economy or if it is due to structural changes in how health care is delivered is no small matter. If it is the former, we are no closer to solving the health care cost dilemma. If it is the later, we could be headed in the right direction.

Two studies out in Health Affairs are contradicting last month’s Kaiser Family Foundation research report that found that the majority of the slowdown in health care spending is due to the recession.

The first study looked at job loss and insurance benefits statistics to see if they were a factor in restraining health care spending. The Harvard Medical School researchers behind the study examined insurance claims of 10 million employees at 150 large companies between 2007 and 2011. They found that among employed individuals, the rate of spending on medical care fell in 2010 from the normal over 5% to under 2%. It picked up slightly the following year to just over 2%, but was still well below the pre-2010 annual rate of increase. 

The researchers concluded that because this decrease was among employed individuals with health insurance, it could not be due to the recession making people forego health spending because of job and insurance loss. It was also a bigger change in health care spending than would be expected from the just employees being made to carry a larger burden of health care costs through insurance plans with high deductibles and other cost-sharing mechanisms.

“We believe that current trends support cautious optimism that the spending slowdown may persist,” wrote the study authors.

In the second study, which was conducted by Harvard economists, the researchers focused on government national health spending data and found that health care spending slowdowns were showing up in groups that normally are not affected by economic factors like loss of employment and private health care coverage, such as elderly patients.

The study authors concluded that only 45 percent of the health care spending slowdown could be attributed to the recession, fewer people with private insurance, and Medicare payment cuts. The reset of the spending slowdown was due to structural changes, they wrote. These included a slowdown in imaging technology development, better drugs, greater patient cost sharing and efficiency improvements among providers.