The Star Beacon; Ashtabula, Ohio

World, nation, state

January 7, 2014

Health care costs grow slowly

WASHINGTON — Even as his health care law divided the nation, President Barack Obama’s first term produced historically low growth in health costs, government experts said in a new report Monday.

While the White House sees hard-won vindication, it’s too early to say if the four-year trend that continued through 2012 is a lasting turnaround that Obama can claim as part of his legacy.

For the second year in a row, the U.S. economy grew faster in 2012 than did national health care spending, according to nonpartisan economic experts at the Centers for Medicare and Medicaid Services.

That’s an important statistic. In most years, health care spending grows more rapidly than the economy, like bills that rise faster than your paycheck. That cost pressure steadily undermines employer insurance as well as government programs like Medicare and Medicaid. But the pattern slowed starting in 2009, and then appears to have reversed ever so slightly and tenuously in 2012.

“Have we turned the corner in a sustainable way? That’s still an open question,” said economist Robert Reischauer, who serves as a public trustee overseeing Medicare and Social Security financing. “But I am more optimistic than I have ever been that fundamental changes are under way.” For example, even though baby boomers are joining Medicare in record numbers, that program’s costs are basically stable when measured on a per-patient basis, Reischauer noted.

Nonetheless, America still spends a whole lot. Monday’s report found that the nation’s health care tab reached $2.8 trillion in 2012, the latest year available. Health care accounted for 17.2 percent of the economy, down from 17.3 percent in 2011.

Total spending averaged $8,915 for every man, woman and child, well above the level in other advanced economies. But more spending doesn’t equate to better health. By many health measures, other countries are ahead.

Also, the per-capita dollar amount doesn’t tell the full story. In any given year, most of the spending goes for the sickest patients, a small fraction of the population.

The report said Obama’s health care law had only had a “minimal impact” on overall spending through 2012. It contributed about 1 percent to rising costs since 2010, the authors said. That will change this year when the law’s big coverage expansion for the uninsured is expected to increase U.S. health spending by about 6 percent.

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