Lingering recession impact slowing health spending growth rate

Although health care spending is continuing to grow, the rate of growth has slowed dramatically. U.S. News & World Report has created a new interactive Health Care Index highlighting spending trends in specific health areas. This index hopes to offer a better understanding of the economic effects of spending and shifting payment responsibility. The index’s base year is 2000, and information is available through 2013.

Affordable Care Act

The indexed data ends before the implementation of major components of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). These include individual and employer health insurance mandates as well as state Medicaid expansion. The budget sequester of 2013, which resulted in automatic cuts to government spending, is not accounted for in the index. Experts expect that data will show that the ACA had a mixed impact on overall spending, with premiums rising for the young and healthy but lowering for those who are economically disadvantaged, elderly, or in poor health.

Why the decline?

U.S. News blames much of the slowdown in spending growth, particularly between 2009 and 2013, on the lingering effects of the recession. The trends in the rates of health insurance spending are a prime example. The number of people covered by private plans has decreased since 2000, while enrollment in Medicare and Medicaid has increased. Much of this effect can be blamed on the large amount of jobs lost during the recession, as people lost health benefits and enrolled in Medicaid or remained uninsured.

The index also points to the aging population causing a large shift in coverage. Up to 77 million seniors have moved from private plans to Medicare in recent years. However, this influx of new enrollees lowered the average age of Medicare participants and their overall healthier status caused the rate of Medicare spending to slow. As this group of seniors ages, spending is expected to increase again.

Other trends

As the health care landscape continues to shift, private insurance is making adjustments as well. Those with private insurance have had to contend with higher out of pocket costs, as employers require employees to contribute more to offset expenses. In 2002, less than half of private insurance plans had a deductible. Fast-forward over a decade, and over 80 percent of these plans had a deductible in 2013. Experts warn that the trend of citizens becoming more responsible for their own health care costs will likely continue. The government’s involvement in health care is expected to continue to grow as well.