Health spending growing at historically low levels in recent years

Rising Cost of HealthcareThe Office of the Actuary (OACT) in the Centers for Medicare and Medicaid Services reports that national health spending grew by 3.9% each year from 2009 to 2011, the lowest rate of growth since the federal government began keeping such statistics in 1960. Estimates from the Center for Sustainable Health Spending at the Altarum Institute suggest that the slowdown largely continued into 2012, with health spending growing by 4.3% last year. The Kaiser Family Foundation/Health Research & Educational Trust Employer Health Benefits Survey shows similar moderation, with premiums in employer-sponsored health plans increasing by 4% in 2012.  

For the past several months, analysts at the Kaiser Family Foundation and the Altarum Institute have been analyzing the recent slowdown in health spending. On average, health spending grew by 4.2 percent per year from 2008 to 2012, down from the recent peak of 8.8 percent from 2001 to 2003 and the lowest rate of growth in five decades. Their main conclusion is that most of this slowdown, 77 percent, has been due to years of a weak economy, which causes people to put off health services when they can and prompts employers and states to reduce health spending. The other 23 percent is explained by changes in the health system, including increased consumer cost-sharing, tighter managed care and modifications in payment and delivery (we can’t precisely pinpoint the separate effects of these three factors).

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If the economy recovers as expected, the annual growth rate in health spending will increase by more than three percentage points over the next several years, to more than 7 percent, from the current low level of about 4 percent. 

Essentially there is a direct correlation between health spending and the economy however the costs of delaying healthcare for patients can in turn lead to increased costs due to chronic conditions that were not managed by patients before they became chronic conditions.  It is essential to remind consumers that failure to see a health care professional can have dire consequences in terms of both quality of life and costs to the patient/insurer.  It is for this reason that healthcare marketers should consistently remind consumers of the importance of seeing a health care professional both for prevention and treatment. Is there one way to do this across all patient segments ?  Of course not.  Primary and secondary market research is needed to learn about the barriers to seeking treatment and ways in which healthcare marketers can help consumers overcome them.   In addition health care professionals should contact patients who have not been in the office for awhile to remind them about annual physicals as well as inquire about prescription drug renewals needed to help manage chronic health problems.

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