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Health care spending has slowed, but reforms still needed

A doctor examines a patient at the University of Miami School of Medicine in Miami, Fla.

HOST: Well one of the big things we consumers spend money on is health care. Spending on doctors, medicines, hospitals and insurance claims a quarter of the country's GDP. As we continue our special coverage
Breakdown: Our economy one step at a time.

Marketplace's John Dimsdale reports on the effect the slow economic recovery is having on health care spending.


JOHN DIMSDALE: The phenomenal rise in health care spending has tapered off over the past couple years. Seems like a good thing, right?

Jerry Jasinowski, who used to be president of the National Association of Manufacturers, says not necessarily.

JERRY JASINOWSKI: Some companies have reduced their health costs, but that's only because they've hired less because they were uncertain about the recovery.

Uncertainty that's also forcing companies to delay reforms of health benefits, like offering workers incentives for preventive care. But as workers lose jobs and drop out of employer-provided insurance, governments have to pick up the slack.

JUDY FEDER: States face a double whammy when the economy is bad, in that more people need Medicaid and they have fewer resources to provide it.

Judy Feder is a Georgetown University health care professor. She says thanks to reforms, government health care spending has become more efficient.

FEDER: Medicare is doing its job to slow cost growth. And we need to extend that kind of efficiency to the rest of the system, meaning private health care spending.

There's another silver lining from the focus on government austerity.

Princeton health economist Uwe Reinhardt says it allows Congress to say no to powerful lobbyists -- like hospitals, doctors and drug makers.

UWE REINHARDT: Congress now probably has a lot more spine to say: "Look, we'd like to help you folks, but look at this deficit. We gotta think of the future and then our kids."

Reinhardt says resisting what he calls the "K Street insurgents" will go a long way to bring down health care's drag on the economy.

In Washington, I'm John Dimsdale for Marketplace.

About the author

As head of Marketplace’s Washington, D.C. bureau, John Dimsdale provides insightful commentary on the intersection of government and money for the entire Marketplace portfolio.

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