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Slow growth of health costs due to recession, not Obamacare

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Health care spending in the United States increased slightly in 2012, but contrary to claims by the White House administration, it had little to do with Obamacare, government actuaries reported Monday.

In this latest report on how much Americans spend on health care, actuaries for the Centers for Medicare and Medicaid Services found that spending rose only slightly in 2012 at a rate of 3.7 percent, which equates to a total of $2.8 trillion.

That same year, the U.S. government spent $8,915 per person on medical care, which is 17.3 percent of gross domestic product – an amount greater than any other country in the world.

The report, published in the journal Health Affairs, also found that prescription costs dropped, thanks to previously expensive and bestselling medications that are now available in generic versions. There was, however, a slight escalation in the amount health insurers paid for hospital expenses.

Although the administration is trying to take credit, the report found that Obamacare had virtually no role in the slow growth of health costs.

Indeed, the authors of the report noted that 2012 was the fourth year in a row that the U.S. has seen “relatively low and stable growth” and that such rate of growth has, for the most part, remained steady since 2009.

The actuaries also wrote that throughout those four years, growth in health care spending has taken place “at the slowest rates ever recorded in the 53-year history of the National Health Expenditure Accounts”.

While spending rose a bit in some areas, it was offset by lower spending elsewhere, according to study team leader, Anne Martin, an economist in the Office of the Actuary at CMS.

For example, Americans spent 4.9 percent more in 2012 for hospital care, which is slightly more than the 4.6 percent they spent in 2011 – and, even though there have been reports of Americans spending an increased amount of their own cash on health care in 2012, the actual amount they spent out-of-pocket rose only 3.8 percent that year.

Of course, the administration keeps trying to take credit for the reduced growth in health care costs, claiming the it is due to the passage of the federal health law in 2010. But that is not the case, according to the actuaries who wrote the report.

Nevertheless, the debate continues.

"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," wrote Jeanne Lambrew, Deputy Assistant to the President for Health Policy, in a blog.

But not everyone agrees with Lambrew's perspective.

Aaron Catlin, deputy director of the National Health Statistics group at CMS, told reporters that the reduced growth in health costs is instead "consistent with what we have seen in past recessionary periods". Or, to put it simply, health spending has been kept down is because of the recession, not the Affordable Care Act (a.k.a. Obamacare).

In the middle of these two contrasting arguments is yet another perspective, which is shared by those who believe that Obamacare has indirectly helped lower health costs.

As Drew Altman of the Kaiser Family Foundation has previously stated, historically speaking, the health care market has “always responded” to the threat of health care reform.

"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," Altman said last summer.

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