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Health Spending Rose Slowly in 2012 — Thanks to Recession

Image: Community health center

Physician assistant Mable Dunn examines patient Melanie Mitsui at Mary's Center, a community health center in Washington, D.C., on Thurs. Oct 17, 2013. John Brecher / NBC News file

Health spending rose just a bit, by 3.7 percent, in 2012 and while the White House tried to take credit for putting on the brakes, it really looks more like plain old economic cycles, government actuaries reported Monday.

The latest look at what Americans spend on medical care shows prescription costs fell as blockbuster, money-making drugs like Lipitor went generic. But health insurers paid a bit more for hospital care, actuaries for the Centers for Medicare and Medicaid Services found.

Obamacare's role? Almost none at all, they found — something the White House strongly disputes.

Their report, published in the journal Health Affairs, found that health care spending in the United States grew at a rate of 3.7 percent in 2012, to $2.8 trillion. The U.S. spent $8,915 per person on health care in 2012, or 17.3 percent of gross domestic product, more than in any other developed country.

“We see that health care spending increased 3.7 percent in 2012, which was the fourth year of relatively low and stable growth,” said Micah Hartman, one of the experts who wrote the report.

The rate has been relatively steady since 2009, the actuaries wrote. “This means that growth during all four years has occurred at the slowest rates ever recorded in the 53-year history of the National Health Expenditure Accounts.”

Spending went up a little in some places, but it was offset by reduced spending in others, said Anne Martin, an economist in the Office of the Actuary at CMS, who led the study team.

For instance, Americans spent 4.9 percent more on hospital services in 2012, or $882 billion, and $565 billion on physicians or in clinics, 4.6 percent more than in 2011. And despite widespread reports that Americans have been spending more of their own cash on health care, out-of-pocket spending grew just 3.8 percent to $328.2 billion in 2012.

Spending fell 1.6 percent on nursing care and in continuing care retirement communities, to $151.5 billion, and spending increased just 0.4 percent on retail prescription drugs to $263 billion, due mostly to expensive, brand-name drugs becoming available generically. Generic versions of the cholesterol drug Lipitor, the asthma drug Singulair and the clot-busting drug Plavix all became available in 2012.

The White House said it was all due to the 2010 health reform law. "While there is a debate about how much the Affordable Care Act has contributed to this health cost slow-down, there is no doubt that it reduced Medicare spending growth, and most experts believe that Medicare savings spill over into the private sector," Jeanne Lambrew, Deputy Assistant to the President for Health Policy, wrote in a blog.

“The slowdown has continued even as the economy has strengthened," Jason Furman, chairman of the Council of Economic Advisers, told NBC News. "Moreover, the slowdown has been largest in Medicare — which is largely insulated from the overall economy. It is increasingly clear that the Affordable Care Act is one of the many factors contributing to what appears to be a more lasting slowdown in the growth of health costs.”

But Aaron Catlin, deputy director of the National Health Statistics group at CMS, disagrees. The slowed growth of health care costs looks like what should happen after a recession. “It is consistent with what we have seen in past recessionary periods," Catlin told reporters.

In other words, the recession has kept health spending low and people haven’t picked up their spending yet even as the economy recovers slowly.

Between 2010, when the Affordable Care Act was signed, and 2012, ACA provisions raised health spending by 0.1 percent, Martin said.

It is a debatable point. Drew Altman of the Kaiser Family Foundation says he believes the Affordable Care Act has indirectly brought down costs. "History tells us that the health-care market has always responded to the threat (and now, for the first time, also the reality) of health reform," he said in a commentary last September. "For this reason it is entirely likely that Obamacare has played and will continue to play a role in the slowdown in health-care cost growth and accelerating market change."

Health insurance pays most of the bills, the actuaries said. Overall, insurers paid for 72 percent of all health spending, with private insurers picking up 33 percent of the tab, Medicare 20 percent and Medicaid 15 percent. People paid $917 billion in health insurance premiums, an increase of 3.2 percent.