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Are Patients Being Better Shoppers For Care?

January 12, 2012
Written by: , Filed in: Practice Management
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The recession may have accidentally created an experiment in the effects of market forces on health care costs.

Some have argued for years that health care costs have risen faster than overall inflation because employer- or government-provided health insurance has insulated consumers from the full costs of their health care decisions. Therefore, they don’t bother to be smart shoppers.

Well, in 2010, for the second year in a row, health care costs rose only modestly. The U.S. Centers for Medicare and Medicaid Services (CMS) reported earlier this week that national health care spending grew by 3.9 percent in 2010, to $2.6 trillion. That’s less than the increase in the gross domestic product, which grew by 4.2 percent.

In 2009, health care spending grew by 3.8 percent. As recently as 2007, it grew by 7.6 percent. During some years in the 1980s and 1990s, the percentage increase was in double digits.

The CMS published the 2010 findings in Health Affairs. It attributed a lot of the health care spending slowdown to the recession. Insurance covered less of the costs, either because insurers cut back on coverage or because individuals lost insurance altogether. So people went to doctors or hospitals less often.

But Kaiser Health News interviewed two analysts who said they thought a more fundamental change might be happening. Ana Gupte, a senior analyst at the business research firm Sanford C. Bernstein, said:

The utilization slowdown is at least in part structural and not just cyclically driven by the economy, and the adoption of higher cost-sharing plan designs will result in some level of permanent slowdown in trend.

Tom Miller, resident fellow at the American Enterprise Institute, agreed: “This is more in balance with how we’ve pulled back on consumption sending in other areas. Even this last remaining holdout has begun to buckle, and it’s been enough years to say the basic forces are changing.”

On the other hand, the CMS report also found a shift in health care spending toward the federal government and away from the private sector and state and local governments. From 2007 through 2010, the federal government’s share of U.S. health care spending increased from 23 percent to 29 percent. Private business’s share decreased from 23 percent to 21 percent, and spending by state and local governments decreased from 18 percent to 16 percent of the total.

So maybe the CMS had something to do with controlling health care spending too. We’re not economists, but we are confident in saying this much: the report contains information for all sides in the health care debates to chew on.

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