It may come as a surprise to anyone who has received a doctor’s or hospital bill lately, but for the past four years, health care spending in the United States has grown more slowly than at any time since 1960, when the federal government started tracking it.
Indeed, in 2012 — the latest year for which complete data are available — health care spending accounted for a smaller percentage of the national economy than it did in 2011. The United States spent $2.79 trillion on health care in 2012, or 17.2 percent of the gross domestic product. That was down 0.1 percent of GDP.
Everything is relative. Even though health care spending grew at a rate of 3.7 percent in 2012, the overall economy grew slightly faster. It doesn’t sound like much of an achievement unless you consider it’s the first time that’s happened since 1997 at the height of the tech boom.
The four years of (relative) slow growth coincide precisely with President Barack Obama’s first four years in the White House. The White House tried to spin the data as a vindication of the Affordable Care Act. But the authors of the study, who work for the Centers for Medicare and Medicaid Services, said the ACA’s effect on the numbers was minor.
A bigger reason was that in 2012, the economy was in the post-2008 economic crash funk. For many people, that’s still the case.
You spend less money on health care if you’ve lost your job and your insurance. Even if you have insurance, higher deductibles and co-pays may force you to put off seeing a doctor.
Historically, the study’s authors noted, “health spending as a share of GDP often stabilizes approximately two to three years after the end of a recession and then increases when the economy significantly improves.”
Still, the amount of money spent in 2012 on hospitals, doctors and clinic services increased. But the increase was offset by slower growth in prices for prescription drugs and nursing home services. The ACA’s lowered payment to nursing homes no doubt played a role here.
Also in 2012, several widely used, high-priced drugs, including Lipitor, Plavix and Singulair, went off-patent. Lower-cost generic versions saved Americans a lot of money.
For all of the moderately good news, Americans still spend $8,915 each year on health care for every person in the country. That’s 250 percent more than most other developed nations in the world. Most health care outcomes here are no better, and in many cases, worse, than in nations that spend far less.
Even if health care costs increase at “only” 3.6 percent a year, that’s not sustainable long term — particularly as more of the baby-boom generation enters what usually are the most medically intensive years of their lives.
Consider that the CMS study found that Medicare enrollment jumped 4.1 percent in 2012 — “the largest one-year increase in enrollment in thirty-nine years.”
This is what has been lost in the politicization of “Obamacare.” Doing nothing, as most Republicans seemed to prefer, was no longer an option. Even for those for whom leaving 50 million Americans without health insurance is a morally viable option, it is not a financially viable option.
Health care costs will go up now that more Americans have access to the system. But long term, they will be healthier and cost the system less. Other reforms built into the Affordable Care Act also may slow down the inexorable rise.
Will it be enough? Probably not, given that an estimated 30 percent of all health care spending does nothing to make sick people well and much of the rest of it is overpriced. The eventual solution will be some form of single-payer national health care system. This will be very expensive, but a lot cheaper than doing nothing.
Copyright St. Louis Post-Dispatch. Reprinted with permission.