Good News on Health Care Spending

For years, health care costs have been rising faster than inflation, driving up the cost of health care and making it less affordable for families and businesses.

But now, the good news about the slowing growth of health care spending nationwide is being increasingly recognized by independent analysts. Just this week, USA Today reported that according to the newspaper’s own analysis that “health care spending last year rose at one of the lowest rates in a half-century.”  According to the paper, health care providers and analysts found that “cost-saving measures under the health care law appear to be keeping medical prices flat.”

As USA Today put it, “Spending for medical care has increased modestly for five consecutive years, the longest period of slow growth since Medicare began in 1966.” And, according to the newspaper’s own number-crunching of Bureau of Economic Analysis data, health care spending shrank slightly as a share of the overall economy.

A report that we released earlier this year also showed that Medicare spending per beneficiary has continued at a historically slow pace – by only 0.4% in fiscal year 2012, following slow growth in 2010 and 2011 and significantly below the 3.4% growth per person in the economy overall.  And a report released last week shows that Medicaid spending per beneficiary also grew at historically slow rates in 2012.

The health care law’s push for coordinated care and paying for quality rather than quantity is putting downward pressure on medical costs, the article reports. It’s improving the way health care providers do business, and that’s good news for patients.

USA Today reports that incentives in the law that encourage more coordinated and higher quality care are working.  The newspaper quoted Dan Mendelson, the CEO of Avalere health saying “Institutions are taking both cost control and quality improvement more seriously."

Essentia Health, a hospital system based in Duluth, Minn., now does more extensive home monitoring of its 300 sickest congestive heart failure patients, which the newspaper says “has cut 30-day admissions to less than one-tenth of the national average and saved millions of dollars.”

“Until now, the government has paid on volume. Now it’s trying to pay more on quality,” said Peter Person, CEO of Essentia and a doctor of internal medicine, as quoted by the article.

This good news from USA Today is just more evidence that the health care law is working.  The Affordable Care Act is driving down costs and improving quality, which will have long-term benefits for our economy and our health.

For more information on the Affordable Care Act and patients’ new protections and rights, see www.healthcare.gov/law/features/rights.