The Slowdown in Health Care Spending in 2009-11 Reflected Factors Other Than the Weak Economy and Thus may Persist

During and immediately after the recent recession, national health expenditures grew exceptionally slowly. During 2009–2011 per capita national health spending grew about 3 percent annually, compared to an average of 5.9 percent annually during the previous 10 years. Policy experts disagree about whether the slower health spending growth was temporary or represented a long-term shift.

This study examines two factors that might account for the slowdown: job loss and benefit changes that shifted more costs to insured people. Based on an examination of data covering more than 10 million enrollees with health care coverage from large firms in 2007–2011, we found that these enrollees’ out-of-pocket costs increased as the benefit design of their employer-provided coverage became less generous in this period. The researchers conclude that such benefit design changes accounted for about one-fifth of the observed decrease in the rate of growth. However, they also observed a slowdown in spending growth even when they held benefit generosity constant, which suggests that other factors, such as a reduction in the rate of introduction of new technology, were also at work.

Their findings suggest cautious optimism that the slowdown in the growth of health spending may persist—a change that, if borne out, could have a major impact on U.S. health spending projections and fiscal challenges facing the country.