fah hospital policy blog

Hospitals Lead Way Towards ‘History Making’ Slowdown in Health Care Price Growth; Hospital Spending Growth Also Slows.

Recent headlines announcing a surge in health spending in 2014 and the end of the slowdown missed the mark and failed to see several encouraging signs in CMS’ annual report. First, it’s important to note that CMS’ actuary had earlier projected a 5.6 percent rate of growth for 2014, yet the actual number came in lower at 5.3 percent.

This week, the Kaiser Family Foundation (KFF) released its annual employer health benefits survey, which highlights an ongoing trend of significant deductible increases that are growing faster than consumer wages and inflation. In a Wall Street Journal blog post, Kaiser Family Foundation President & CEO Drew Altman explains that this year’s survey marks, quote, “a (remarkable) 10-year run of moderate increases, averaging 5%. But the slowdown in health-care cost growth has been all but invisible to average consumers because their out-of-pocket costs have been rising at a time when their wages have been relatively flat…. over the past five years deductibles have risen almost seven times faster than wages and almost three times faster than premiums*.”

Yesterday the Centers for Medicare and Medicaid Services (CMS) released their annual health care spending projections, covering the time period 2014-2024. The data shows health care spending growth has increased to 5.5% for 2014, which is a modest increase from the national spending slowdown trend that has yielded historically low health care spending growth for several consecutive years. And while many are quick to declare the end of the spending slowdown or ratchet up concerns, it is imperative that we take this latest data into perspective.