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U.S. spending less on health care - and it's a good thing

By Catholic Online (NEWS CONSORTIUM)
May 7th, 2013
Catholic Online (www.catholic.org)

The U.S. recession and weak economy contributed significantly to a slowdown in spending - which certainly affected money spent on healthcare by Americans. Coupled with less generous benefits resulted in higher out-of-pocket costs. Less generous coverage and less disposable income, people in the U.S. consumed fewer health services. The good news is that spending growth also slowed among those whose health benefits haven't changed, including Medicare patients, suggesting a more enduring trend.

LOS ANGELES, CA (Catholic Online) - A study of this economic rends was undertaken by Harvard researchers. "Our findings suggest cautious optimism that the slowdown in the growth of health spending may persist - a change that, if borne out, could have a major impact on US health spending projections and fiscal challenges facing the country," the authors write.

As a result, the Congressional Budget Office has since revised its projections of Medicare and Medicaid spending over the coming decade downward by hundreds of billions of dollars.

The study also determined that the recent slowdown doesn't just reflect temporary economic weakness, but also structural shifts in how health care is delivered and financed. This may be to the Affordable Health Care Act and might be a harbinger of a longer-term trend.

If this prediction is accurate, workers can expect higher wages and the country's projected medium term deficits are significantly overstated, which in turn suggests lawmakers' continuing finagling with the current budget deficit, and deficits over the coming decade, are misguided.

As an adjunct, health care economist David Cutler attributes the majority of the slowdown to fundamental changes. This may be attributable to slowing technological and pharmaceutical innovation and increased efficiency among providers. If current trends continue, he concludes, then over the next 10 years "public-sector health care spending will be as much as $770 billion less than predicted. Such lower levels of spending would have an enormous impact on the U.S. economy and on government and household finances."

Studies over the past few years have been unspecific about the non-macroeconomic causes of the spending growth slowdown, and guarded about the likelihood that it will persist. Analysts have been cautious about attributing any of it to the slow move away from fee-for-service medicine, which the Affordable Care Act hopes to accelerate.

The news isn't all good. It also reflects the fact that the cost of consuming health care has far outpaced wages over the past several years, leaving many people and families unable to afford services they may need.

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