Health care spending rising more slowly

WASHINGTON — National spending on health care will continue to surge in coming years, but at a slower rate than the previous two decades, according to new government analysis of the nation’s $3 trillion health care tab.

The report suggests that changes under way in medical care and insurance coverage may help rein in America’s notoriously high-cost system, even at a time when millions of Americans gain insurance through the federal health law.

But the slowing still may not make health care affordable, as medical spending is projected to outpace economic growth over the next decade, the report suggests.

“Analysis of historic trends tells us that health care spending tracks with economic growth, so as the economy is anticipated to improve over the next decade, health spending growth is projected to grow faster,” said the report’s lead author, Andrea Sisko, an economist at the Department of Health and Human Services.

The federal agency analyzes every year how the country spends money on health care, and though the projections are vague, they provide something of an annual report card on the nation’s complex system.

This year’s analysis is mixed.

After years of very slow growth, stemming largely from the recession, health care spending is expected to pick up to an average annual rate of 5.7 percent over the next decade, or 1.1 percentage points higher than overall economic growth.

The spending growth is driven by the recovering economy and by the expansion in insurance coverage that began this year under the Affordable Care Act, according to analysts. The health law allows Americans in most states to get guaranteed coverage either through a commercial health plan or through Medicaid. (Some states whose political leaders oppose the law have not expanded their Medicaid programs to cover all their poorest residents, an option under the law).

The acceleration in spending will push the country’s total health care tab to more than $5 trillion in 2023, or about 19.3 percent of the nation’s economy. That is up from 17.6 percent this year, already far more than any other industrialized nation.

Analysts also expect the government’s share of that bill to increase, as more Americans age into Medicare and get subsidized coverage through Medicaid or the new insurance marketplaces created by the health law.

But the authors of the new report do not expect health care spending to return to its explosive growth of the two decades before the 2008 recession.

Sean Keehan, another government economist who worked on the report, noted that rising use of generic drugs, increasing price pressure on hospitals and doctors and growing popularity of high-deductible health plans that force consumers to pay more out of pocket for their medical care will restrain health spending.

Other experts believe that changes in the way care is delivered are beginning to have an effect as well. Insurance companies are increasingly rewarding medical providers who deliver better-quality, more efficient care rather than simply do more procedures.

Additionally, more Americans are retiring and entering Medicare, whose costs are lower than the commercial coverage most get through an employer.

These are all hopeful signs, said Larry Levitt of the Kaiser Family Foundation, a nonprofit that analyzes health policy and is not affiliated with the Kaiser Permanente health plan.

Like many experts, Levitt said that policymakers must work to further slow rising health care costs, which continue to take a larger share of workers’ pay.

“The fact that health spending is expected to grow slowly doesn’t help someone whose paycheck is growing even more slowly,” Levitt said. “Now is not the time to take the foot off the brake.”

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