Health care spending growth at record low, but why?


U.S. health care spending growth is at its slowest in the past 50 years, but the reasons behind this slowed growth are unclear. A new AMA review examines trends behind U.S. health spending and looks at possibilities for future spending growth.

Health care spending growth from 2009 to 2012 was below 4 percent each year, and data from the Centers for Medicare & Medicaid Services (CMS) show the deceleration began in 2003, five years before the “great recession.” Researchers attribute between 37 percent and 77 percent of the slowdown to the recession. While it’s clear that other factors have contributed, there’s a lack of consensus on what the most important ones were.

Factors thought to have contributed to the historically slow growth rates, as outlined in the AMA review, include:

  • Increased patient cost-sharing and decreased real income
  • Changes in insurance mix from higher to lower paying payers
  • Changes in Medicare payment policy
  • A shift in the Medicare and Medicaid populations to younger and healthier beneficiaries
  • Cost containment efforts as a reaction to lower revenue growth during the recession

Recent data from the Altarum Institute suggest that an acceleration in spending growth began at the end of the first quarter of 2013, leading some researchers to wonder whether the slowed growth period may be over.

CMS projects that health spending will grow at an average annual rate of 6.1 percent from 2016 to 2023—higher than recent growth rates, but still low from a historical perspective.

Find this analysis and others on the AMA policy research Web page.