While you can categorize yesterday's news on health care spending as a dog-bites-man story, it still makes for a really interesting — and informative — read. By now, you're likely familiar with the broad brushstrokes from the Health Affairs article: health care spending was down in 2010 … way down. In fact, spending grew at a paltry 3.9 percent in 2010, just 0.1 percent faster than in 2009. Those two years represent the slowest rate of growth in the half-century that the government has collected the data, Anne Martin, an economist in the office of the actuary at CMS, said during a call with reporters.

Given that health care is a lagger industry, and given that the Great Recession didn't officially end until 2009, it shouldn't really be a surprise that 2010 was a down year. There was a confluence of factors: the highest unemployment rate in 27 years, a substantial loss of health coverage, employers being cautious about hiring and making substantial operational investments, and the "lowest median inflation-adjusted household income since 1996." However, Martin and her co-authors noted the "slowdown in health spending growth from the recent recession occurred more quickly than was the case in previous recessions."

Those harsh economic realities made consumers much more "cautious about their spending," Martin said. Consumers postponed medical care as evidenced by drops in median inpatient admissions and slow growth in ED visits, outpatient visits and outpatient surgeries. "Growth in the use and intensity of services represented just 0.1 percentage point of the 3.7 percent growth in personal health care spending in 2010," the authors wrote.

 

The CMS economists packed a lot into the 12-page report. Too much for us to cover in this blog, but here are some additional highlights (or lowlights, depending on your point of view):

 

  • Federal, state and local governments account for 45 percent of health care spending, up from 41 percent in 2003. The federal government's share rose to 29 percent in 2010, up from 23 percent in 2007. This was partly due to enhanced Medicaid matching dollars under the stimulus law.
  • Spending on hospital services hit $814 billion in 2010, a 4.9 percent increase from the year before. By comparison, spending on hospital services rose 6.4 percent from 2008 to 2009.
  • Private insurance spending on hospital care grew by 2.2 percent, a sizable drop from the 4.8 percent growth in 2009. It's the slowest rate of growth since 1996.
  • Medicare spending on hospital care grew by just 4.6 percent, but Medicaid spending increased by 11.2 percent. Part of this was due to supplement payments to hospitals at the end of 2010.

The increased reliance on government payers is of concern to hospital officials since Medicare and Medicaid pay less than the cost of care, Caroline Steinberg, vice president of trend analysis at the AHA told me. Also, she suggested that hospitals didn't see much of an uptick in utilization in 2011. Rather, she says hospitals continue to look for ways to reduce costs as a way to maintain operations.

Neither the CMS economists nor Steinberg could predict when utilization and spending will increase at a faster clip. Much of that obviously hinders on the economic recovery and whether the jobless rate drops significantly. And then there's 2014 and the expected influx of millions of uninsured people into the health care system. But the Supreme Court will have something to say about that first.

Matthew Weinstock is senior editor of Hospitals & Health Networks. You can reach him at mweinstock@healthforum.com.