Kudos to Robert Samuelson  (Op-Ed, January 16, 2012, The Washington Post) for bringing attention to health care spending in the U.S., and to the more subtle but potentially more important issue of the relationship between health spending and the economy—one that typically goes unrecognized as commentators equate health care with medical need. Samuelson nicely lists the factors that might serve to constrain future spending (more efficient doctor visits, increased use of generic drugs, spending cuts baked-in to the Affordable Care Act), and others that seem likely to return us to an unsustainable spending trajectory (population aging, a rebound in discretionary utilization as the economic expansion gains steam and the 2014 insurance mandate).

It’s important to note that the downward pressure on utilization, especially per capita utilization, that we’ve seen since 2002 results from an increase in patient cost sharing beginning a decade ago, in addition to job losses caused by the Great Recession (see chart). Thus, even with a stronger economic recovery, research by Tom Getzen shows that the latter effects will continue to be felt for 2-5 years (though the severity of the Great Recession could change the previously observed patterns). A mystery for a future blog to explore is the longer-term health employment growth trend that barely shows any drop, suggesting that part of the spending growth decline is an illusion.

Recognizing the importance of timely estimates of health spending and related aspects (health employment, health prices and health utilization), in 2011 the Altarum Institute Center for Sustainable Health Spending began tracking these measures on a monthly basis in our Health Sector Economic Indicators reports. As of February 9, 2012, we will have estimates for all of calendar year 2011.

We have learned that, for the first 11 months of 2011, health spending grew at an annual rate of 4.5 percent, compared to the 3.9 percent increase for 2010 (reported by the Centers for Medicare & Medicaid Services on January 9). Yet the 2011 spending growth pattern was uneven, characterized by higher spending earlier in the year followed by a steady decline, with annual growth of only 3.6 percent in November 2011.

Thus, while spending (and utilization) for 2011 as a whole are up, the nation will likely enter 2012 with health spending growth near the record-low levels experienced in 2009 and 2010. In addition, with monthly data, we observe that the health spending share of GDP was 17.8 percent in October 2011, up from 16.4 percent at the start of the recession (December 2007) but down from the all-time high of 18.2 percent in June 2011. As Samuelson notes in his piece in the Post, CMS data show this ratio at 17.9 percent for both 2009 and 2010; the annual data do not enable identification of dynamic trends. (The January Health Sector Economic Indicators report and accompanying info-graphic are available at www.altarum.org).

What this all suggests is that we could be entering an historically unique period where health care spending grows at the same or lower rate than the nation’s economy. But in any case, answering the difficult underlying questions must begin with timelier tracking of health-care spending and we hope the Altarum Health Sector Economic Indicators reports can do just that.

All postings to the Health Policy Forum (whether from employees or those outside the Institute) represent the views of the individual authors and/or organizations and do not necessarily represent the position, interests, strategy, or opinions of Altarum Institute. Altarum is a nonprofit, nonpartisan organization. No posting should be considered an endorsement by Altarum of individual candidates, political parties, opinions, or policy positions.