Is Healthcare Spending About To Accelerate? | Healthcare and Technology news | Scoop.it

Bend a resilient object and it will spring back with a vengeance once released from your grip. Is that what is about to happen to healthcare spending?

For years now, experts have been debating ways to “bend the cost curve ” – take the sharp rise in healthcare costs, picture a rapidly ascending line on a XY axis, and slow it down, bend it so it moves horizontally to the X axis.

In the last few years, we seem to have bent the curve as we’ve hoped to. Healthcare spending is growing more slowly than it has in decades. The federal government recently reported that: “The Congressional Budget Office now estimates that Federal spending on Medicare and Medicaid in 2020 will be $188 billion below what it projected as recently as August 2010.”


But this good economic news may soon come to an end, and the pent-up energy of the healthcare economy could snap back and break our budgets if we are not vigilant.

Experts are still debating why healthcare costs have slowed down of late. Some people think the Affordable Care Act, aka Obamacare, has helped to bend the cost curve. Some posit that the rise of high deductible health insurance plans accounts for a good deal of the savings.  But almost everyone agrees that the great recession of 2008 has played a leading role in reducing the growth of healthcare expenditures. When people don’t have money to spend on healthcare, they (surprise, surprise) spend less money on healthcare.

In a New England Journal of Medicine article, Charles Roehrig from the Altarum Institute mapped out what healthcare spending would have looked like if the great recession hadn’t happened, and what it would have looked like if healthcare spending had dropped in accordance with the size and depth of the recession. The picture shows that actual spending lies right between these two extremes:


The recession reduced healthcare spending. But not as much as you would think, because other factors are driving costs up, such as raising healthcare prices and the aging of our population.


Moreover, Roehrig warns that when we experience a stronger economic recovery, healthcare spending could rebound. Thanks to the ACA, more people have health insurance, and health insurance is well-known to increase the demand for healthcare services.

Pharmaceutical companies continue to bring out expensive “specialty drugs,” which Roehrig believes on their own could contribute a half percentage point per year to healthcare expenditures.