Slowed health spending not just the economy's fault

Healthcare spending grew by 3.9 percent between June 2011 and June 2012, falling below the 4.2 percent growth rate in May, after allowing for regulatory changes, according to a new report from nonprofit researcher, the Altarum Institute.

Spending on healthcare represented 18 percent of the gross domestic product (GDP) this past June, down from the 18.3 percent all-time high in June 2011.

However, tying growth in health spending to the growth in GDP can create an artificial perception of "excess" healthcare spending growth during recessions and recoveries, according to article in the New England Journal of Medicine, published online Wednesday.

Since the slowdown in health spending started two and a half years before the recession, the deceleration can't be blamed solely on the economy, the article noted.

"One could argue that the poor economy had nothing to do with slower growth in excess personal healthcare spending," the researchers wrote."We do not adhere to that extreme view but do put more weight on structural factors."

Some of those factors include low physician payment rate hikes and less utilization of physician services. Another major factor influencing health spending growth is "nonpersonal healthcare"--administrative costs for government health insurance, net costs of private insurance and expenditures related to research and equipment, the article noted.

The analysis could be good news for struggling healthcare organizations, as the researchers project healthcare spending will continue to grow at less than 1 percent for the next few years, excluding a one-time boost in 2014 when coverage expands under health reform.

For more:
- check out the Altarum report (.pdf)
- here's the NEJM article

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