Economy drags ’09-’11 healthcare spending growth rates

National health spending increased 3.9 percent in 2011, the same rate of growth as 2009 and 2010, creating a period of historically low growth in aggregate health spending, according to a study published in the January issue of Health Affairs.

Overall U.S. healthcare spending reached $2.7 trillion in 2011, according to the researchers. The authors noted that growth in healthcare spending roughly matched growth in nominal gross domestic product (GDP), with healthcare’s share of GDP remaining stable at 17.9 percent.

“The recent recession had an immediate and noticeable effect on the health sector because of high unemployment, loss of private health insurance coverage and a reduction in the resources available to pay for healthcare,” wrote Micah Hartman, of the Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) Baltimore, and colleagues.

From 2007 to 2010, because of rising unemployment, private health insurance enrollment declined by 11.2 million, according to the authors. This was matched by increases in both Medicaid enrollment and the numbers of uninsured at 7.5 million and 7 million, respectively.

Despite the multi-year slowdown, Hartman and colleagues pointed to a number of signs of change gleaned from 2011 data. There was faster growth in the use and intensity of healthcare goods and services, and insurance coverage expanded for dependents under the age of 26 due to a provision within the Patient Protection and Affordable Care Act (PPACA) requiring insurers cover this population.

Other provisions of the healthcare reform law that lowered spending included an increase in prescription drug rebates for Medicaid fee-for-service enrollees, a 50 percent discount on brand-name prescription drugs for certain Medicare Part D enrollees and increased coverage for preventive services.

In contrast to spending at the national level, personal healthcare spending growth accelerated from 3.7 percent to 4.1 percent in 2011. Despite cost control provisions in PPACA, this was largely driven by spending growth for prescription drugs and physician and clinical services. While the growth in these two areas was faster than overall healthcare spending increases, it remained well below average annual growth rates from the previous decade, which reached 7.8 percent and 6.1 percent for prescription drugs and physician and clinical services, respectively.

Looking ahead, Hartman and colleagues wrote that 2011 economic, income and job growth was slower than what is normally expected during an economic recovery. “This fact raises questions about whether the near future will hold the type of rebound in healthcare spending typically seen a few years after a downturn. Data for the years 2012 and 2013 will provide important indications of the state of the U.S. health system as the major insurance expansions associated with the Affordable Care Act grow nearer on the horizon.”