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Recession keeps US health spending low, report finds

The recession kept U.S. health care spending low in 2011, according to a federal government report released on Monday. It finds that health spending grew just 3.9 percent -- the same historically low rate of growth as over the past three years.

But don’t credit the controversial 2010 health reform law. It has had little or no effect on spending just yet,  according  to the report, written by the Centers for Medicare and Medicaid Services (CMS).

“The Affordable Care Act had a minimal impact on overall healthcare spending,” Micah Hartman, a statistician at CMS who wrote the report, told reporters in a telephone briefing.

And  Americans still spend more per person than people in any other developed country on health care -- more than $8,600 a head, the report finds.

“In 2011 US health care spending grew 3.9 percent to reach $2.7 trillion,” the report reads.

“Although spending for retail prescription drugs and physician and clinical services grew at a quicker pace in 2011 than in 2010, growth slowed for hospital care services and certain categories of nonpersonal health care spending, including the net cost of health insurance,” the report says.

That’s even with more than a million new young people carrying health insurance under one of the most popular provisions of the health reform law: the requirement that health insurance companies let parents carry their children on their accounts until they are 26.

Hartman says the recession of 2007-2009 had a major effect on health spending. As tens of thousands of people lost their jobs, they also lost health insurance, and thus stopped spending money on health care, he said.

“During 2007–10, private health insurance enrollment declined by 11.2 million, while Medicaid enrollment increased by 7.5 million and the number of uninsured people increased by 7 million,” Hartman and colleagues write in the report, published in the journal Health Affairs.

"There is a well-documented correlation between insurance coverage and health care use: People tend to seek less medical care when they lack coverage,” they added. “In 2010 private health insurance coverage declined by another 3.4 million, and the number of uninsured people increased by 2.2 million.”

Over the same time, 2.7 million young adults under age 26 joined their parents’ health insurance plans – but they didn’t spend much money on healthcare because they were so young and generally healthy.

Ceci Connolly, managing director of the PwC Health Research Institute, agrees that the recession is still affecting health spending. “People are putting off care,” she told NBC News.

But there’s also evidence that Americans are figuring out when they are being advised to take unnecessarily expensive medications, and to have unneeded tests and procedures. “We know that consumers are starting to be more discerning,” Connolly said.

“There are a couple of dozen states with transparency laws on the books … and we think that is starting to have an impact,” she added. “Just the simple fact of putting that out there in the public domain causes people to think twice about prices they are (being charged).”

Employers, who provide health insurance for about 55 percent of U.S. adults, have been pushing to lower costs, Connolly points out. There’s also an effort by both the federal government and by insurers for doctors to prescribe cheaper, generic drugs instead of pricey brand names.

One area where spending did go up was in hospitals. Hospital spending rose more than 4 percent in 2011, to $850.6 billion. People also used doctors more, Hartman said, and spending for Medicare, the federal health insurance plan for people over 65, grew 6.3 percent in 2011.

And public health spending fell in 2011, for the first time since the government began keeping statistics in 1960, Hartman said. This is in part because the states and federal government ramped up spending in 2009 and 2010 because of the new pandemic of H1N1 swine flu, and then not nearly as much in 2011 when the new strain of flu did not turn out to be especially deadly.

Most experts agree the United States spends far too much for health care, and many reports show that Americans do not end up healthier or even living longer because of all this spending. One of the main goals of the 2010 health reform law is to reduce spending by cutting waste, reducing expensive mistakes such as infections patients get while in the hospital and encouraging doctors to choose the most cost-effective treatments.

Connolly says she sees some evidence this is happening already -- and she credits the Affordable Care Act in part .

“What is happening out there in the healthcare industry is they are taking their cues from that law and concluding that we have to be more efficient, that we have to actually deliver quality these days and that means reducing errors and waste,” she said. “You can see things starting to head in that direction.”

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