Report: Rise in health care spending lowest on record

WASHINGTON (USA TODAY) — Health care spending since the 2010 passage of the Affordable Care Act has risen by 1.3% a year, the lowest rate ever recorded, and health care inflation is the lowest it has been in 50 years, a report released Wednesday by the White House shows.

An economy hobbled by the recession and 2008 economic crisis played a role in some of the reduced spending growth, officials said, but the report cited "structural change" caused, in part, by the law.

The report's release comes as President Obama and his administration struggle with the political fallout associated with the problem-filled opening of the federal health care exchange, the online marketplace where uninsured Americans can shop for and buy insurance. The exchange's website,, opened Oct. 1 and has been hampered by outages and delays, particularly in its first weeks of operation.

Per capita spending has grown at a rate of 1.3% since 2010, the lowest recorded rate for any three-year period on record, according to the report, which was conducted by the White House Council of Economic Advisers.

Price inflation rose by 1%, the council found — the lowest since 1962.

Because of cost reductions, the Congressional Budget Office reduced Medicare and Medicaid spending projections in 2020 by $147 billion since 2010, the council noted.

The lower increases in spending as the economy has recovered is a sign the changes are structural, said Jason Furman, the chairman of the Council of Economic Advisers. Prices remain low, he said, and Medicare spending, which he said doesn't typically reflect trends, remains low.

One key area in which the law helped drive costs down, the report said, are the provisions that allow Medicare to reduce overpayments to providers and health plans. Another factor, Furman said, are fines for hospitals that readmit Medicare patients within 30 days of their release and the increased use of accountable care organizations.

"For a long time, [readmission rates]were hovering around 19%, and now they are continuing to go straight down," Furman said. "A very important part of the structural story is the Affordable Care Act," he said.

The Consumer Price Index statistics released Wednesday showed that "year over year health inflation slowed," Furman said.

Private insurance spending grew at an annual rate of 1.6% in the last three years, Furman said, while Medicare spending had 0.0% growth rate and Medicaid spending was "actually minus 0.5%."

"Health spending is certainly cyclical when you see a downturn," Furman said.

But increases in cost-sharing, such as high-deductible insurance plans, as well as medications coming off patent, helped decrease costs, Furman said.

Follow @KellySKennedy on Twitter.



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