fah hospital policy blog

Perspectives on health policy affecting America’s hospitals and the patients we serve.

Category Archives: spending-slowdown

CMS’s Hospital Charge Data Release Remains Irrelevant And Misleading

June 02, 2015 | FAH Hospital Policy Blog Team

Category: Medicare, Spending Slowdown

Earlier this week, CMS released its annual update of Medicare hospital charges data. This update by CMS virtually is the same type of charges data dump it released last year, and the year before that. In releasing the hospital charges data, CMS asserts that “data transparency facilitates a vibrant health data ecosystem, promotes innovation, and leads to better informed and more engaged health care consumers.”

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Health Care Spending Slowdown Generates Massive Savings

April 10, 2015 | FAH Hospital Policy Blog Team

Category: Spending Slowdown

On Wednesday, the Urban Institute released a new study showing the national health care spending slowdown trend continues to endure in 2015. It is welcome news for health providers facing threatened program cuts in the coming year. Using a compilation of earlier projections from CMS and the ACA baseline, the Urban Institute finds that over the 2014-2019 period:

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CMS Report Validates Enduring Spending Slowdown: Data Show Continued, Record Setting Slowed Health Care Spending

December 04, 2014 | FAH Hospital Policy Blog Team

Category: Spending Slowdown

A new annual report from CMS on national health spending growth in 2013 is making headlines this week, with continued slowing of rates to record-low levels. According to the report, which was released in Health Affairs, in 2013 the growth of health care spending in the United States slowed to its lowest level in more than 50 years. The spending slowdown endures for another year, which is continued good news for consumers, businesses and taxpayers.

There are a number of key data points in the annual report, including:

Total national spending for health care in the United States increased 3.6% to $2.9 trillion in 2013—the lowest growth rate in 53 years

The spending growth increase in 2013 was slower than that of 4.1% in 2012 and continued a pattern of low growth—between 3.6% and 4.1% for five consecutive years

The health spending share of the gross domestic product (GDP) remained stable at 17.4 percent in 2013

Medicare spending growth decelerated from 4.0 percent in 2012 to 3.4 percent in 2013

Medicare per beneficiary spending growth is flat in 2012 and 2013

The White House weighed in on the report in a new blog post, saying:

“Today’s data make it increasingly clear that the recent slow growth in the cost of health care reflects more than just the 2007-2009 recession and its aftermath, but also structural changes in our health care system, including reforms made in the Affordable Care Act. As we have noted previously, if even a portion of the recent slowdown continues, the benefits for Federal and State budgets, families’ budgets, and the economy as a whole will be dramatic.”

The enduring spending slowdown already has yielded substantial savings for Medicare, totaling more than a trillion dollars in revised spending projections from CBO. If the slowdown continues, studies show it will generate as much as an additional $900 billion in Medicare savings.

The evidence of the impact of the slowdown continues to grow. An analysis of a CBO report issued earlier this year reveals Medicare spending per beneficiary is falling when adjusted for inflation, and based on current CBO projections will continue to experience negative cost growth through 2020.

The annual CMS report is proof positive that the spending slowdown trend, if allowed to endure, will reap significant savings for our national health care system. Many studies have credited structural changes put in place by health care providers as a key driver of the sustained the slowdown, well beyond the effects of the Great Recession.

The White House blog notes two key differences in the data from the 2013 spending that supports the assertions of those pointing to structural changes as a key factor in the sustained trend:

Slow growth has been seen in Medicare, not just private insurance: Like other recent years and as shown above, 2013 saw very slow growth in per enrollee costs in Medicare, not just private insurance. But the Medicare program and its beneficiaries are largely insulated from developments in the broader economy, and economists at the Congressional Budget Office have demonstrated empirically that weak macroeconomic performance does not appear to increase Medicare spending growth. The fact that Medicare spending has nevertheless seen very slow growth suggests that structural factors are major contributors to recent slow growth.

2013 was the fourth full year of the economic recovery: With each passing year, it becomes increasingly difficult to explain why and how the 2007-2009 recession could still be exerting significant downward pressure on health care spending growth and, thus, increasingly implausible that the recession is the main explanation for that slow growth. That challenge is particularly acute for 2013, the fourth full year of an economic recovery in which the pace of job gains have strengthened steadily over time.

Hospitals have helped lead the way in implementation of these structural changes, recognizing the importance of this investment as a part of a transforming national care model. As the CMS report notes, hospital spending growth decelerated sharply in 2013, accompanied by a deceleration in price growth. And Medicare hospital spending growth declined to 2.6 percent, a 32 percent drop from 2012.

This is why the FAH has long urged policymakers to let the system work, allowing this vital trend to continue as long as possible. The CMS report showing continued consecutive years of health care savings is heartening news and serves as an important validation of this historic trend.

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Improvements in Medicare Outlook Reinforce Health Care Spending Slowdown

July 28, 2014 | FAH Hospital Policy Blog

Category: Spending Slowdown

Today, the Trustees of the Social Security and Medicare trust funds released their annual report on the financial status of the two federal programs. The trustees report an improvement in the outlook for the Medicare Hospital Insurance (HI) Trust Fund, extending expectations of funding from last year’s report an additional four years into 2030.

The report also attributes these improved projections in Medicare to lower spending on hospital services:

“The improvement in the outlook for HI long-term finances is principally due to lower-than-expected spending in 2013 for most HI service categories, which reduced the base period expenditure level about 1.5 percent and contributed to the Trustees’ decision to reduce projected near-term spending growth trends.”

Today’s report is the latest news underscoring the enduring national health care spending slowdown, in addition to near record-low hospital pricing and cost growth. Earlier this month, the Bureau of Economic Analysis’ (BEA) announced a 1.4% decline in national consumer health care spending – the largest decrease in national health care spending in 30 years.

The BEA and Trustees reports are further supported by other evidence including an annualized .9% increase in hospital price growth in 2014 (based on data from the Bureau of Labor Statistics).

And perhaps the most staggering number of all: recent reports from the CBO show the organization lowered its estimates of Medicare and Medicaid spending by well over $1 trillion over a series of revised projections since 2010.

Today’s announcement from the Social Security and Medicare Trustees, taken together with this series of data, figures and projections in health care serve as further proof the spending slowdown is alive and well in 2014. This is not merely a blip on the radar, but a part of a historic and enduring trend in health care today that could potentially bring an additional $900 billion in savings to Medicare. Hospitals will continue to do their part in leading the way to further savings and higher quality care.

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