Press Release

For Immediate Release Contact


Erica Garland
(202) 745-5119


Sue Ducat
Director of Communications
(301) 841-9962


Health Affairs Examines Potential Longevity of Slowdown in Health Care Spending Growth


Articles in May Issue suggest mechanisms to realize savings in Medicare


Bethesda, MD -- Health Affairs' May issue analyzes the recent slowing in growth of health care expenditures and explores whether the trend will last. The issue also addresses major cost drivers in Medicare and presents proposals for putting the program on a more sustainable path. Another featured article tracks federal spending on mental health during severe state budget constraints throughout the recession.


Researchers are cautiously optimistic that the slowdown in health care spending is here to stay. A featured study by Michael Chernew of Harvard Medical School and coauthors examined two factors potentially contributing to the record slowdown in growth to 3.1 percent during 2007-11: job loss and benefit changes shifting costs to the insured. Analyzing National Health Expenditure Accounts and large-employer data, they found that benefit design changes that increased enrollees' out-of-pocket costs were responsible for about one-fifth of the observed decrease in the rate of growth. However, the slowdown occurred even when benefit generosity at large firms was held constant. They suggest that other factors are largely responsible and that major events, such as health reform, shifts in payment methodology, and the transformation of the delivery system's organization, may contribute to a longer-term trend of slower spending growth.


In a related article, David Cutler of Harvard University concludes that fundamental changes, including less-rapid development of imaging technology and new pharmaceuticals, increased patient cost-sharing, and greater provider efficiency, led to the majority of the slowdown in health care spending growth, and if this path continues for the next ten years, public-sector health care spending could wind up $770 billion under projections.


Supplemental Medicare coverage is associated with significantly higher rates of overall spending growth over time. In this first empirical study of the issue, Ezra Golberstein of the University of Minnesota and coauthors found that employer-sponsored and self-purchased supplemental coverage were associated with annual spending growth rates of 7.17 percent and 7.18 percent, respectively, compared to 6.08 percent for beneficiaries without supplemental coverage. They used data from the Medicare Current Beneficiary Survey from 1992 to 2005, before Medicare Part D benefits were introduced, and analyzed a sample of 104,365 observations. The researchers found significantly higher rates of spending growth in all supplemental insurance categories compared to the category without supplemental insurance, even while controlling for sociodemographic, disease, disability, and health behavior characteristics. The authors suggest that policy efforts to restrict the generosity of Medicare supplemental insurance plans, and the anticipated lower levels and lower generosity of employer-sponsored supplemental Medicare coverage for future retirees, may have the potential to slow the rate of spending growth for Medicare beneficiaries.


Postacute care led Medicare spending growth from 1994-2009. Amitabh Chandra of Harvard University and coauthors examined spending growth in Medicare for three representative conditions, and they found that from 1994 to 2009, postacute care spending per patient for heart attacks more than tripled, for congestive heart failure more than doubled, and for hip fractures doubled during the year following the initial hospital admission. Postacute care services--long-term hospital care, rehabilitation care, and skilled nursing facility care--were also the fastest growing major spending category. Spending at skilled nursing facilities was the largest portion of both the level and growth rate of spending at postacute care facilities. The researchers recommend that policy solutions designed to control Medicare costs, such as the current experiment under the Medicare Bundled Payment for Care Improvement initiative, are more likely to be effective if they include postacute care.


Other featured articles include:


  • Treated Disease Prevalence And Spending Per Treated Case Drove Most Of The Growth In Health Care Spending In 1987-2009, Kenneth E. Thorpe, Emory University

  • Public Financing Of The Medicare Program Will Make Its Uniform Structure Increasingly Costly To Sustain, Katherine Baicker, Harvard School of Public Health and National Bureau of Economic Research

  • Federal Spending On Behavioral Health Accelerated During Recession As Individuals Lost Employer Insurance, Katharine R. Levit, Truven Health Analytics
About Health Affairs

Health Affairs is the leading journal at the intersection of health, health care, and policy. Published by Project HOPE, the peer-reviewed journal appears each month in print, with additional Web First papers published periodically at The full text of each Health Affairs Web First paper is available free of charge to all website visitors for a one-week period following posting, after which it switches to pay-per-view for nonsubscribers. Web First papers are supported in part by a grant from The Commonwealth Fund. You can also find the journal on Facebook and Twitter. Read daily perspectives on Health Affairs Blog. Download our podcasts, including monthly Narrative Matters essays, on iTunes. Tap into Health Affairs content with the new iPad app.