CMS report shows healthcare spending growth remains low

ACA a factor for slow growth, but not overall spending
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National health spending growth remains low for the fourth consecutive year, according to the Centers for Medicare & Medicaid Services Office of the Actuary.

Overall, health spending grew at an annual rate of 3.7 percent in 2012 to $2.8 trillion--in part due to slower growth in prescription drug, nursing home, private health insurance and Medicare expenditures.

Meanwhile, the percentage of the overall economy devoted to health spending fell slightly--from 17.3 percent to 17.2 percent--as the nominal (not adjusted for inflation) gross domestic product grew by 4.6 percent, according to a Health Affairs article about the report.

The report also credited Medicare's s slow growth in 2012 in part to the Affordable Care Act even though healthcare reform had limited impact on overall spending because reforms weren't fully implemented at that point.

"For the second straight year, we have seen overall healthcare costs grow slower than the economy as a whole. This is good news," said CMS Administrator Marilyn Tavenner in the report announcement. "We will continue to work with tools given to us by the Affordable Care Act that will both help us control costs for taxpayers and consumers while increasing the quality of care."

In the Health Affairs article, CMS officials wrote that Medicaid spending growth (federal, state and local combined) remained relatively low but grew from 2.4 percent in 2011 to 3.3 percent in 2012 as some states withdrew previous payment cuts or expanded care. However, in the announcement, CMS said the increase still represents "historically low overall growth rates tied to improved economic conditions, as well as efforts by states to control costs."

Other findings from the report reveal:

  • Private health insurance spending grew 3.2 percent compared to 3.4 percent in 2011.
  • Despite an increase in Medicare enrollment, Medicare spending growth increased by 4.8 percent compared to 5 percent growth in 2011. Total Medicare spending per enrollee grew 0.7 percent.
  • Retail prescription drug spending grew only 0.4 percent, which the report attributes to the fact that many drugs lost their patent protection, leading to increased sales of lower-cost generics.
  • Spending for freestanding nursing care facilities and continuing care retirement communities rose by only 1.6 percent in 2012, down from 4.3 percent growth in 2011, due to a one-time Medicare rate adjustement for skilled nursing facilities.
  • Hospital spending grew 4.9 percent, compared to 3.5 percent in 2011, because of prices and increased use and intensity of services.
  • Spending on total physician and clinical services grew by 4.6 percent to $565 billion, primarily due to increases in the volume and intensity of services.

For more:
- read the announcement
- here's the full report
- check out the Health Affairs article

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