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Medical Spending Slowed in 2013 Due to Economy, Health Overhaul, CMS Says

By Melanie Zanona, CQ Roll Call

December 3, 2014 -- Health care spending in the United States continued to slow down in 2013 and mimicked the modest growth of the overall economy, according to a recent report from the Centers for Medicare and Medicaid Services (CMS).

Total spending for health care increased by 3.6 percent last year—the lowest since the agency starting tracking such data in 1960—compared to 4.1 percent growth in 2012. CMS officials attributed the slowdown to the sluggish economy, cost savings arising from the 2010 health care law and federal budget sequestration, among other factors. 

"The key question is whether health spending growth will accelerate once economic conditions improve significantly," said Micah Hartman, a statistician in the office of the actuary at CMS. "Historical evidence suggests it will."

Health spending's share of the national gross domestic product in 2013 remained at 17.4 percent, largely unchanged since 2009.

Spending on private health insurance and Medicare, the federal insurance program for the elderly and disabled, contributed to the slowdown. A shift towards high deductible insurance plans held health insurance premiums to a 2.8 percent increase while slowing enrollment rates limited spending on Medicare to a 3.4 percent increase. Both were affected by various provisions of the health care law.

Spending on hospital care, physician and clinical services and out-of-pocket costs also contributed to the overall slowdown. But Medicaid and retail prescription drug spending actually experienced faster growth rates in 2013.

Retail prescription drug spending increased 2.5 percent, up from less than one percent the previous year, which was partly linked to price increases in brand-name and specialty drugs. Meanwhile, spending on Medicaid, the federal–state health program for the poor, increased by 6.1 percent, compared to a 4 percent increase in 2012 and 2.5 percent in 2011. CMS officials attributed the boost to the expansion of benefits in some states and the temporary payment increases for primary care physicians under the health care law.

"It takes time for legislative changes to work through the system, as well as changes to income and wealth during a recession," Hartman said. "Health care spending has been growing at historically low rates."

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