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Economic Slowdown Responsible for Delayed Decrease in Health Care Spending

May 22, 2013 by Leave a Comment

What causes health care spending to go up and down?  A recent study by the Kaiser Family Foundation has found that the economy has a dramatic effect on the changes in health care spending.  Health care spending is very comparable to any other consumer good:  when the economy is good, we spend more on health care; when it is poor we spend less.  The study found, however, that those changes in health care spending are not immediate and lag behind the economy by as much as six years.

Changes in Rate of Increase

Policy analysts have been perplexed at the reduced rate of  increase in health care spending  in recent years.  CMS’ Office of the Actuary has reported the decline in health care spending to be about 3.9 precent per year since 2009.  The Congressional Budget Office has lowered its forecast of future spending by Medicare and Medicaid in future years based on this recent reduction in the increase in health care spending.  In 2012, national health expenditures amounted to an estimated $2.8 trillion.   Because this number is so large, a small change in the growth rate can result in a savings of hundreds of millions of dollars. The Kaiser Family Foundation pointed this out by saying a “lowering of the growth rate by one percentage point on average over the next decade means that total health spending would be almost half a trillion dollars lower than expected 10 years from now.”

Economy Predicts

From 2001 to 2003, health care spending peaked at an average annual increase  of 8.8 percent.  Since that date, the rate of health care spending has decreased. The Kaiser Family Foundation research found that “inflation in the current year, as measured by the Gross Domestic Product (GDP) deflator, as well as inflation in the prior two years” and “the growth in real GDP in the current year as well as the GDP growth in prior five years” was a way to predict the rate of increase in health care spending.  Its analysis found that these factors accounted for 85 percent of the variation in health care spending from 1965 to 2011.

Time Lag

“More surprising” writes the Kaiser Family Foundation is that these effects can take up to 6 years before they start influencing the rate of health care spending. The researchers speculated that the causes for this delay might include: (1) the use of insurance which protects people from the full cost of health care for a period of time; (2) consumers cutting back on health care spending only after they have cut back on spending on other items and services; (3) employers delaying  immediate changes to their health care policies for a year or two after economic changes; (4) the inability of hospitals, which account for a large percentage of health care spending, to address changes in their spending for a while after the economy changes; and (5) legislated changes as a result of economic changes may not be implemented for a number of years.

The analysis indicated that the health care spending should have decreased by 3.6 percentage points from the peak. In reality, the average decrease in health care spending was 4.2 percent during that time period, 2008 to 2012.  From these figure it can be surmised that the economic downturn was responsible for 77 percent of the decrease in health care spending.  What accounted for the other 23 percent? Kaiser attributes changes to the health care system, like higher deductibles and other cost sharing mechanisms to slow the use of services, as well as increased use of managed care and delivery system changes.

Future Growth

In the future, the Kaiser Family Foundation’s analysis predicts that a health care spending increase of 3.5 percent by 2019 can be expected due to growth in the economy.  Adding in other factors, the analysis predicts that the increase in health care spending could remain relatively flat for the next couple of years and then grow by 7.1 percent at the end of the decade. It is unlikely that double-digit increase in health care spending is likely to return, writes the Kaiser Family Foundation.

“There is a very strong statistical link between business cycles and inflation and health spending,” said the Kaiser Family Foundation.  The analysis warns though that, “because the effect of economic activity on health prices and utilization is gradual and highly lagged,  it is not always easy to discern the relationship just by looking at a single year.”

Filed Under: Centers for Medicare and Medicaid, Congressional Budget Office, Government Document, Health care spending, HHS

Aspartame in Flavored Milk—Do Consumers Have a Right to Know?

April 24, 2013 by

The Food and Drug Administration (FDA) is accepting comments on the question whether to allow the dairy industry to add “non-nutritive sweeteners” to flavored milk without mentioning it on the label. The International Dairy Foods Association (IDFA) and the National Milk Producers Federation (NMPF) filed a citizen petition requesting a change to the regulations that define the products that can be sold as milk. They claim that using low-calorie sweeteners in flavored milk will help fight childhood obesity because chocolate (and other flavored) milk sweetened with aspartame would have fewer calories than those with nutritive sweeteners.

In its Proposed rule and request for comments, the FDA notes that the industry is free to use aspartame in flavored milk under current regulations if the label identifies the milk as “reduced calorie.” But the industry doesn’t want to do that because, they say, children don’t find food identified as low-calorie appealing. They say that 70 percent of the milk consumed in schools is flavored. But low-fat chocolate milk contains 160 calories, while low-fat regular milk has only 100. If schools remove the chocolate milk, children will drink less milk and will lose its nutritional benefits. The petition points to a New York study where flavored milk was limited in certain schools, and milk consumption dropped 10 to 15 percent.

The industry argues that  its proposal would “promote honesty and fair dealing in the marketplace” by preventing consumer confusion. After all, consumers don’t think of milk—even flavored milk— as a product that contains sugar. So, they reason, if the product has fewer calories because it’s sweetened with aspartame or other artificial sweeteners, the name of the product on the label should not disclose that information to the consumer. That way, consumers won’t be confused about the nutritional value of reduced calorie chocolate milk compared to conventional chocolate milk.

There are some consumers who prefer not to use aspartame. Perhaps they get headaches, or find that artificially sweetened drinks leave them thirsty. Some are uncomfortable with the knowledge that aspartame breaks down into phenylalanine, methanol, and diketopiperazine (DKP). Phenylalanine is highly toxic to individuals with phenylketonuria (PKU), who cannot process it. Methanol breaks down further, into formaldehyde.  Some consumers simply don’t want to eat any food their great-grandmothers wouldn’t recognize as food. And even consumers who don’t object to artificial sweeteners may want to know what they’re consuming.

The government initially approved G.D. Searle’s application to market aspartame in 1974, but the FDA approval process was questioned because of alleged irregularities. Approval was withdrawn in 1980 and restored in 1981. A 1987 report of the Government Accounting Office (now the Government Accountability Office) (GAO) details the history of the FDA’s approval of aspartame up to that point.The GAO noted that more than one FDA staff member who worked on the approval moved to a position with G.D. Searle or a law firm or public relations agency that represented it. The GAO also found that 28 of the 69 scientists who reviewed aspartame thought more research was needed. A 2006 story in the New York Times also discussed the scientific dispute over the safety of aspartame.  Today, the prevailing scientific opinion appears to be that aspartame is safe.

The way the FDA processed the petition also is noteworthy. The petition was filed in October 2009, but the public wasn’t notified then. The proposed rule requesting comments was published in the Federal Register in February 2013. In the intervening three years, the petitioners met with the FDA at least once, in October 2011, to discuss the merits of their petition, before the public was aware of it.

This isn’t the first time that industry has opposed labeling to that would facilitate consumers’ choices. That’s why there is no federal requirement to label milk from cows that were treated with recombinant bovine growth hormone (rBGH). In fact, the FDA’s interim guidance says that producers who label their products “not produced using rBGH” should add a qualifying statement that the FDA has found no significant difference between milk produced without rBGH and milk produced with it. The rationale for requiring the qualifier is that standing alone, the claim “from cows not treated with rBGH” is misleading because it implies that the competitors’ milk is of inferior quality.

A citizen petition to require producers to label food grown from genetically modified organisms (GMOs) has been pending since October 2011. When she testified before a subcommittee of the Senate Appropriations Committee on April 18, 2013, Dr. Margaret Hamburg, FDA Commissioner, was asked when the agency would consider the petition. Hamburg wouldn’t give a firm date, but said that she supported voluntary disclosure of genetically modified (GM) ingredients.  Asked about the safety of GM food, she said that the agency had no reason to believe it posed a serious health risk. The FDA does not proactively seek out this information, and any risk of harm to the environment is outside the agency’s jurisdiction.

Filed Under: Food, Food & Drug Administration, Government Document, Labeling, News

Postmenopausal Women Should Avoid Daily Intake of Vitamin D and Calcium Supplements

March 8, 2013 by

The U.S. Preventive Services Task Force recently recommended that certain postmenopausal women avoid taking daily low doses of vitamin D and calcium supplements to ward off bone fractures. Low doses were defined as 400 international units (IU) or less of vitamin D and 1000 milligrams or less of calcium.

The task force noted that “no net benefit for the primary prevention of fractures” was found for postmenopausal women taking low dosage amounts. However, evidence did point to a potential increase in the occurrence of kidney stones among postmenopausal women. During a seven-year follow-up period, 1 in 273 women were diagnosed with kidney stones. The low doses were found to do more harm than good for this population of postmenopausal women considered to be noninstitutionalized or community-dwelling asymptomatic adults without a history of fractures.

The task force had previously concluded in a separate recommendation that vitamin D supplementation was effective in preventing falls in community-dwelling adults aged 65 years or older who are at increased risk for falls because of a history of fractures.

The task force also looked at the use of the supplements in men and premenopausal women, but was unable to “assess the balance of the benefits and harms” of using the supplements to prevent fractures in these groups.

The recommendations do not apply to people with osteoporosis or vitamin D deficiencies, the task force said.

Filed Under: Government Document
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