Healthcare Spending Growth Expected to Remain Low

The growth in healthcare spending will continue to be held down by the sluggish economy, the continued shift of healthcare costs from the employer to the employee, and the movement towards value-based reimbursement models, according to a report by Fitch Ratings. The rate of increase in U.S. healthcare spending is likely to remain low even as the end of the tepid economic recovery gives way to more robust growth.

Health spending grew 3.9% annually from 2009 to 2011, compared to an annual growth rate of 4.7% to 6.6% the prior three years, according to data from Centers for Medicare and Medicaid Services. Two recent studies were published in Health Affairs that provide some insight into the causes.

One found the weaker economy accountable for 37% of the lower spending trajectory and attributed an additional 8% to cuts in Medicare reimbursement and decline in commercial insurance coverage. The study leaves 55% of the reduction unexplained. The other study indicated that benefit design changes (including higher deductibles and out of pocket costs) contributed to 20% of the lower increase in spending. For more information, visit www.fitchratings.com.

Last Updated 11/25/2020

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