Lower Health Care Spending: A New Era in American Health Care?

Health care spending in 2009 and 2010 grew at the slowest rates in 50 years. This startling news, reported by the Centers for Medicare and Medicaid Services (CMS), was largely attributed to the shrinking economy. In a new blog post, Commonwealth Fund president Karen Davis says that overlooked in the discussion is the lower spending that is projected through the end of the decade.

“Either the original estimates were too high,” Davis says, “or the tectonic plates underlying the health system are beginning to shift in anticipation of new incentives under health reform or in response to health care leaders’ efforts to transform care over the last decade. Predictions that the Affordable Care Act would fail to control costs and, in fact, accelerate spending have not been borne out by the early experience.”

The reduction in projected national health spending is particularly important because the pre-reform estimate of health care costs was used by the Congressional Budget Office and the CMS Office of the Actuary in gauging the cost and impact of health reform. Davis says that new projections for both the costs of covering the uninsured and Medicare spending are substantially below pre-reform estimates.

Davis also discusses health care delivery changes that may have contributed to slower spending growth, such as private sector initiatives promoting improved safety methods, performance benchmarks, and high-value care, as well as recent legislation that has encouraged more hospitals and doctors to make meaningful use of health information technology.

Staying the course toward a high performance health system shows promise of, at long last, bending the health care cost curve, Davis says. “It will be particularly important to deploy all of the tools in the Affordable Care Act to build on this beginning to ensure that beneficial services are provided while duplicative, preventable, and unnecessary services are eliminated.”