National health spending growth remains low for fourth consecutive year

A new CMS study out in the journal Health Affairs today confirms yet again that health care spending growth in the US is at historic lows.  And this growth is across all parts of the system from Medicaid (yes, Medicaid) where growth is also at historic lows to private health insurance growth:

For the fourth consecutive year, growth in health care spending remained low, increasing by 3.7 percent in 2012 to $2.8 trillion. At the same time, the share of the economy devoted to health fell slightly (from 17.3 percent to 17.2 percent) as the nominal gross domestic product (GDP) grew by 4.6 percent. Faster growth in hospital services and in physician and clinical services was mitigated by slower growth in prices for prescription drugs and nursing home services. Despite an uptick in enrollment growth, Medicare spending growth slowed slightly in 2012, mainly due to lower payment updates. For Medicaid, slowing enrollment growth kept spending growth near historic lows. Growth in private health insurance spending also remained near historically low rates in 2012, largely influenced by the nation’s modest economic recovery and its impact on enrollment.

These are simply facts.  At no other period in the last half century have health costs grown so slowly.  None.  Already last month the Congressional Budget Office is projecting such lower health costs in the future that our national budget outlook is substantially improved.

Every year for the last four I’ve been writing about how health costs are decreasing much more slowly that they ever have and every year naysayers have piled on saying, essentially, “this can’t continue.”  Well, it is continuing.  There isn’t a magic bullet out there driving this reduction either.  It’s a combination of more cost sharing, changes in how we pay doctors and hospitals through Medicare and put in place by the Affordable Care Act, and a willingness on the part of major providers to tackle the tough cost issues.



  1. Silence DoGood

    January 7, 2014 at 6:19 pm

    A computational look at the cost structure of the ACA, for those who are interested. Any commentary would be much appreciated. Good luck.


  2. LayintheSmakDown

    January 8, 2014 at 8:42 pm

    Most rational people would not say 3.7% is low when you consider inflation was around 1.2%. That is 300% more price inflation than the rest of the economy! You cannot support that when in this Obaconomy the average raise is even less than inflation. So much for the pulse/liberals/progressives being in touch with the little guys….guess they only like to be in touch through the smoke up the rear end process.

    Here is the link for your current inflation stats:

  3. LayintheSmakDown

    January 8, 2014 at 8:49 pm

    Oh, and true GDP was only 2% not 4.7%….more smoke and mirrors


    And “real” 2012 gdp was far from the %15.95 trillion that it would need to be in order to be 4.7%.

  4. ML

    January 9, 2014 at 1:28 pm

    What’s with GOPer’s and inflation? They’ve been using it as a scare tactic since the 70’s but it hasn’t been a problem since the late 70’s. Try reading some Krugman, he’ll blow your mind much like the LSD you must be on.

  5. LayintheSmakDown

    January 9, 2014 at 2:52 pm

    Well inflation is the basis for a great number of things. A lot of companies base raises somewhat on inflation and the largest component of spending is based largely on inflation….government handouts. Now I do realize that it is a measure that is changed over time to meet the political needs of whoever may be in power, but it is still the main indicator we have to compare prices and how the price of one thing vs. the other or vs. the whole basket of goods.

    And if you have such an aversion to inflation, then how about you present a relevant argument that a 3.7% growth rate is in line with what the people see in their pocketbooks (I know wage growth has been nowhere near that either). Heck, I even presented an alternative in that the economy grew nowhere near 3.7% so there is inflation….and the GDP that health spending far outpaces.

  6. ML

    January 9, 2014 at 4:24 pm

    I don’t have an aversion to inflation, if I did I would be in line with repubs and deficit hawks. I just feel that it’s influence in monetary policy has been overstated. And using it to deny or diminish the fact that our health care costs/spending has finally started to slow is unnecessary.

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