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Health spending rises slowly for fourth year in a row

WASHINGTON — The share of the economy devoted to health care fell in 2012, according to federal data released Monday.

The decline, which federal officials say is the first since 1997, comes after four years of unprecedented slow growth in health care spending. And it has economists puzzling again over whether the slackening merely reflects the short-term impact of the recession or shows a larger, more structural change in the medical industry.

"There are two explanations," said David Cutler, a Harvard University economist who served as a health care adviser in Barack Obama's 2008 presidential campaign. "One is the recession was a big and drunken episode that has a very long hangover. The alternative view is that something big has actually changed."

The new data, published in the journal Health Affairs, showed health spending grew by a relatively slow 3.7 percent in 2012, about one percentage point slower than the rest of the economy. That meant health care shrunk as a percentage of gross domestic product, falling from 17.3 percent in 2011 to 17.2 percent in 2012.

"If you look back at history, the last time this happened was in 1997," said Aaron Catlin, deputy director of the National Health Statistics Group in the Centers for Medicare and Medicaid Services' Office of the Actuary.

Since 2009, health care costs have increased by less than 4 percent each year, the slowest period of growth since the federal government began collecting the information in the 1960s.

Federal officials caution that the slowdown looks similar to the other periods that have followed a recession, when health spending has tended to tick upward at a slower rate than the rest of the economy. They also said the Affordable Care Act has had a "minimal" impact on health care spending. At most, they believe the law increased spending by 0.1 percent between 2010, when it was passed into law, and 2012.

"The trends we're seeing in the last few years are consistent with the historical relationship between health spending and overall economic growth," said Micah Hartman, a Medicare statistician.

Health spending rises slowly for fourth year in a row 01/07/14 [Last modified: Tuesday, January 7, 2014 12:34am]
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