Health care spending may be slowing down over the long haul, suggests a new report released by Robert Wood Johnson Foundation.
According to the Centers for Medicare and Medicaid Services, health spending grew at a record low rate of 3.9 percent in 2011 even as the economy grew by 4 percent.
In February 2013 the Congressional Budget Office lowered its Medicare and Medicaid forecasts to reflect the latest spending trends, and the most recent estimates have many analysts wondering if the slowdown in health spending growth is here to stay.
Though many within the industry speculate that health care spending is bound to bounce back after the recession, the report argues that this is not the case.
The report explores underlying causes behind the halt in spending, concluding that a drop in median household incomes — over 10 percent over a decade — and a long-term increase in the uninsured have led to less revenue for health providers.
Median household incomes fell by 10 percent over a decade. Approximately 95 percent of jobs lost during the Great Recession were middle class jobs, while most of the positions created since then have been lower-paying service sector jobs. Consequently, the number of people with employee sponsored insurance has fallen by 11 percent.
"People have less money to spend on health care and the insurance arrangements are not as comprehensive and rich as they were before. So it all affects their ability to pay and the health community has to respond to that," John Holahan, fellow at The Urban Institute, told DOTmed News.
The report concludes that even if the economy bounces back in the future, it won't result in big income increases. The gains will be mainly in Medicaid and fairly competitive lower-cost plans, and insurers will continue to be pressured to give providers lower rates.
"Hospitals have been squeezed and have been trying to make changes to be more profitable — our takeaway is that this is not going to change a whole lot," said Holahan.
