No one on the business side of radiology is likely to question the key finding from a recent analysis of healthcare spending in 2013: Spending growth decelerated 0.05% in 2013. Spending increased just 3.6%—compared to 4.1% in 2012—to $2.9 trillion, or $9,255 per person.

Hartman et al, writing in the December issue of Health Affairs, attributed the spending slowdown to slower growth in both private health insurance and Medicare. Spending on private insurance slowed from 4.4% in 2012 to 2.8% in 2013, driven by slower growth in hospital, physician and clinical services.

Medicare spending growth declined from 4.0% in 2012 to 3.4% in 2013, a trend attributed to slower growth in enrollment, impacts of ACA (lower fee-for-service payments and adjustments in Medicare Advantage benchmark payment rates), the federal budget sequestration of 2013 and the impacts of the ACA-mandated medical loss ratio and rate reviews on the net cost of private health insurance. The authors also cite an overall deceleration in investment in medical structures and equipment, influenced by uncertain economic conditions and provider cost control efforts.

The deceleration trend was in line with recent historical patterns of price stabilization following periods of economic downturns.

While stable since 2009, spending continues to command 17.4% of the gross domestic product and it did rise in 2013. Factors accounting for growth include intensity and use (1.1% increase), and medical price growth of an average 1.5% in 2012 and 2013, in line with the 1.5% growth in economy-wide prices and well below the 2.5% average annual growth rates from 2009 through 2011.

Medicare accounted for 20% of healthcare spending, or $585.7 billion; private healthcare insurance accounted for 33% of total spending, or $961.7 billion; Medicaid represented 15%, or $449.4 billion; private out-of-pocket spending represented 12%, or $339.4 billion.

Medicaid had the greatest growth (6.1%), followed by Medicare (3.4%), private out-of-pocket spending (3.2%), private health insurance (2.8%).

The main financiers of healthcare are households, private businesses, and federal and local governments, with households (including out-of-pocket spending, contributions to private health insurance premiums and contributions to Medicare through payroll taxes) responsible for the largest share of spending at 28%. 

Spending by private business—including the employer share of contributions to private health insurance premiums, worker’s compensation, temporary disability payments, contributions to Medicare Hospital Insurance Trust Fund and healthcare provided at the workplace—has remained stable at 21% since 2009.

The federal government share of spending was 26% in 2013, down from 28% in 2010, which the authors attributed to the expiration of Medicaid enhanced matching rates. State and local government’s share of spending increased from 16% to 17% during the same period. Together, government spending increased 3.4% and accounted for 43% of overall spending.

With healthcare spending stabilized at 17.4% of GDP, the question the authors ask is this: As the economy improves, and as health coverage continues to expand, will the growth in healthcare spending accelerate again? The authors cite ACA provisions and higher patient deductibles as potential moderating effects.

“The balance of these and many other factors over the next few years will determine how the historically low health spending growth from 2009 to 2013 is viewed: as the temporary aftermath of the great recession or the beginning of a new era,” they conclude.

Reference

1. Hartman M, Martin AB, Lassman D, Catlin A, the National Health Expenditures Team. National health spending in 2013:growth slows, remains in step with the overall economy. Health Aff. 2015;34:150-60.