Healthcare expenditures are picking up again

Dan Gorenstein Jul 29, 2015
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Healthcare expenditures are picking up again

Dan Gorenstein Jul 29, 2015
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When it comes to healthcare, it’s generally understood we have a spending problem. Namely, we spend too much.

A new report from the Centers for Medicare and Medicaid Services suggests expenditures are picking back up after a recent historic slowdown.

But even with the uptick, these numbers suggest the nation is making progress.

Cornell economist Sean Nicholson says he can see some good news tucked into this economic forecast.

“We should take some solace that we are seeing 5 percent projected increases,” he says.

In the 30 years running up to the Recession, the nation saw a 9 percent annual increase on average. According to this new report, over the next decade, we’re talking a 5.8 percent average.

So what’s changed?

Vanderbilt health economist Melinda Buntin says slow economic growth, higher insurance deductibles and new incentives that pay doctors and hospitals for valuable care rather than volume all are at play.

“What’s going on is that all of these things together are combing to create a climate in which different types of decisions are being made by thousands of decision-makers in the healthcare system,” she says.

This slowdown has gone on long enough that “I think we are seeing a new normal in healthcare,” says Buntin. “We can see it as evidence of a fundamental shift in the healthcare system.”

That said, the report points out prescription drug spending projections have risen sharply at more than 12 percent, the highest jump since 2002.

Evidence to Buntin that this shift will only last as long as the country keeps trying to control spending.

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