CMS Report: Recession Drove Lower Healthcare Spending

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A report on 2012 healthcare spending shows that for the fourth consecutive year, health-related spending in the U.S. exhibited slow growth. Total expenditures rose by 3.7 percent, amounting to $2.8 trillion, or $8,915 per person. Health costs as a share of GDP declined as well; falling from 17.3 percent to 17.2 percent. The analysis was conducted by the Office of the Actuary at the Centers for Medicare and Medicaid Services, and published in Health Affairs.

“The low rates of national health spending growth and relative stability since 2009 primarily reflect the lagged impacts of the recent severe economic recession,” Anne B. Martin, an economist in the Office of the Actuary at CMS stated.  “Additionally, 2012 was impacted by the mostly one-time effects of a large number of blockbuster prescription drugs losing patent protection and a Medicare payment reduction to skilled nursing facilities.”

In 2007, the year-over-year increase in spending was 6.3 percent. Following the recession in 2008, spending grew by 4.7 percent. Since then, the percentage has been between 3.6 and 3.8 percent. The growth during the last four years is the lowest since tracking the National Health Expenditure Accounts began 53 years ago. According to the report, there was little impact from the Affordable Care Act on spending, but certain provisions, like increased Medicaid rebates for prescription drugs did contribute. Four areas of spending growth were identified in the report as cost drivers.

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