Think health care costs are soaring? Think again.

Why healthcare is so expensive
Why healthcare is so expensive

Think you are paying a lot more for health insurance and to see the doctor?

Actually, national health spending grew 3.6% in 2013, the lowest annual increase since 1960, when the Centers for Medicare and Medicaid Services began tracking the statistic, officials said Wednesday.

Spending slowed for private health insurance, Medicare, hospitals, physicians and clinical services and out-of-pocket spending by consumers. However, it accelerated for Medicaid and for prescription drugs, according to the report, published online by the journal Health Affairs.

Premiums for private health insurance grew 2.8% last year, compared to a 4% increase in 2012. Low overall enrollment growth, greater usage of high deductible plans and other benefit design changes and the health law's medical loss ratio and rate review provisions contributed to the decline, the Centers found.

Nearly 190 million people -- or 60% of the population -- were covered by private health insurance in 2013. Enrollment increased 0.7% last year, the third straight annual increase.

Consumer out-of-pocket spending -- including co-payments and deductibles or payments for services not covered by a consumer's health insurance -- grew 3.2% in 2013, down from the 3.6% growth in both 2011 and 2012.

Spending for physician and clinical services grew 3.8% last year, a slowdown from 2012 when spending grew 4.5%. Expenditures for hospital care increased 4.3%, slower than the 5.7% rate of growth in 2012.

Drug costs, however, rose at a faster rate than the previous year. Total spending growth for retail prescription drugs increased 2.5% last year, compared to 0.5% in 2012. Drug spending growth increased in 2013 for several reasons, among them higher prices for brand-name and specialty drugs.

Overall, health care spending has grown at historically low rates for the past five years, which is consistent with declines generally seen during economic downturns, such as the Great Recession that crippled the U.S. economy at the end of 2007. Looking ahead, "the key question is whether health spending growth will accelerate once economic conditions improve significantly; historical evidence suggest that it will," noted the authors, who are from the Centers' Office of the Actuary.

They also pointed out, however, that in the near term, the health sector will "undergo major changes that will have a substantial impact" on consumers, providers, insurers and sponsors of health care. These are the result of the health law's creation of online exchanges, its expansion of Medicaid, and restraints the law made to the Medicare program, the analysts found.

Health care spending rose to $9,255 per person, in 2013, or $2.9 trillion total, the study found. As a share of gross domestic product, health care remained at 17.4%, the same share since 2009, the CMS researchers found.

The 3.6% spending growth for 2013 tracks a CMS estimate from September and is 0.5 percentage point lower than 2012.

Spending on Medicare grew 3.4% in 2013, down from the 4% growth in 2012. The difference was due mostly to slower growth in enrollment and spending changes included in the health care law, including reductions in federal payments to the private Medicare Advantage plans that offer an alternative to traditional Medicare. The automatic 2% federal budget payment cuts, known as sequestration, also played a role in reducing Medicare spending, which was nearly $586 billion in 2013.

Younger and healthier baby boomers signing up for Medicare has kept the growth in Medicare per-enrollee spending relatively flat.

Medicaid spending, on the other hand, increased 6.1% percent in 2013, following growth rates of 2.5% and 4%, respectively, in 2011 and 2012. A variety of factors, including increases in hospital care -- which accounts for 36% of Medicaid spending -- contributed to the cost increase. The federal government and state and local governments spent $449.4 billion in 2013 on Medicaid.

Kaiser Health News is an editorially independent program of the Kaiser Family Foundation.

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