Growth of Health Care Spending Remains at Historic Low
By Kathleen Sebelius, Secretary of Health and Human Services
Today, we got some very good news when the official numbers for health care spending were released. New statistics from the Centers for Medicare & Medicaid Services show that the overall growth in health spending was at a historic low for the third year in a row. According to the annual Report of National Health Expenditures, total U.S. health spending grew 3.9 percent in 2011. That’s the same rate of growth as in 2009 and 2010, and in all three years spending grew more slowly than in any other year in the 51 year history of the report.
As a share of our nation’s Gross Domestic Product (GDP), overall health care spending also remained the same as in the previous two years—17.9 percent. This contrasts sharply with the pattern of the last thirty years, when health spending as a share of GDP grew by about 0.3 percent per year.
A number of provisions in the health care law that will help control costs and spending are still being implemented, but the statistics show how the Affordable Care Act is already making a difference. Growth in total private health insurance premiums remained low in 2011 at 3.8 percent. And the net cost ratio (which takes into account overhead and profits) for individual health polices declined thanks in part to the new 80/20 rule, which requires insurers to spend at least 80 percent of premiums on health care or provide rebates to their customers.
The health care law takes other steps to save money for consumers. One provision of the law, called rate review, prevents insurance companies in all states from raising rates with no accountability or transparency. These new standards ensure that insurance companies justify their actions if they want to raise rates by 10 percent or more. So far, rate review has helped to save Americans an estimated $1 billion on their premium bills.
But there is still more to do. I strongly urge the states, our partners, to continue the work to hold insurance companies accountable by reviewing and building the capacity to deny unreasonable health insurance rate increases. The Affordable Care Act made $250 million available to states for this important work, and 43 states, the District of Columbia and five territories have started to put this funding to good use. The next deadline to apply for these valuable resources is February 1, 2013, and I encourage states to take advantage of this opportunity so we can all work to save consumers money and bring more transparency, competition, and accountability to health insurance markets.
The Affordable Care Act helps us to avoid the runaway growth in health care spending of the last decade, keep down costs for consumers, and ensure better health and better access to health care for millions of Americans.