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USA Today: Healthcare Spending Hits 10-Year High

By    |   Monday, 31 March 2014 03:05 PM

In the final quarter of 2013, healthcare spending grew at the fastest pace in 10 years, reversing the low growth trend in health spending seen since the recession, USA Today reported.

From October to December, healthcare spending rose at an annualized rate of 5.6 percent.

That surge prompted an upward revision in the government's estimate for consumer spending, which rose at an annualized rate of 3.3 percent, the best quarterly pace since 2010, according to USA Today.

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Consumers spending on healthcare accounted for nearly a full quarter of the nation's better-than-expected annualized economic growth rate of 2.6 percent.

A major driver of the rise in healthcare spending was hospital revenue, which surged $8 billion, more than during the previous four quarters combined. Royal Bank of Scotland Economist Omair Sharif finds this puzzling, since the number of inpatient days fell 1 percent during the fourth quarter, USA Today reported.

Dan Mendelson, CEO of consulting firm Avalere Health, told USA Today that the Affordable Care Act has made hospitals more efficient and led insurance companies to shift more costs to patients. And given the state of the economy for the past several years, people chose to limit their medical visits, thereby cutting overall costs.

But these trends look set to change once more, Mendelson noted. Factors such as high-tech treatments are re-emerging, pushing up costs. The economy is also improving, providing Americans with income to seek out medical attention they may have postponed or otherwise ignored.

That the government has pushed Americans to get health insurance means that more people will likely put those benefits to use, adding another boost to medical spending.

Healthcare spending will likely rise 6.1 percent this year, compared with approximately 4 percent in 2013, as an estimated 11 million Americans gain health insurance, USA Today says the Centers for Medicare & Medicaid Services projected.

The S&P Healthcare Claims Indices, which are based on claims data obtained from 33 leading health insurance companies and other healthcare data providers covering approximately 60 million commercially insured Americans across all 50 states, shows healthcare costs rose 3.5 percent in the 12 months ended November 2013, compared with the 4.9 percent rise for the 12 months ended November 2012.

Medical costs — inpatient and outpatient hospitalization plus professional services — rose 3.7 percent and prescription drugs rose 2.6 percent over the same period. All rose at a slower pace than a year earlier.

"The growth in healthcare spending continues to slow," said David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. "The key question in the slowdown is whether we are seeing a shift in healthcare cost trends that is sustainable or whether we are merely observing the slower pace of overall inflation and weak economic growth."

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In the final quarter of 2013, healthcare spending grew at the fastest pace in 10 years, reversing the low growth trend in health spending seen since the recession, USA Today reported.
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2014-05-31
Monday, 31 March 2014 03:05 PM
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