Congressional Budget Office Recognizes Spending Slowdown in Health Care Costs

Lost among all the back and forth of the C.R. and the funding of Obamacare was a seminal working paper from the Congressional Budget Office that closely aligns with the findings of the FAH commissioned Dobson DaVanzo study which concluded that the national health care spending slowdown is not related to the recession.

The working paper  notes:

“we did not find evidence that the financial crisis and economic downturn caused beneficiaries to use less care…The fact that spending growth remained slow in 2011 and 2012, after financial markets and income growth had begun to slowly recover, further suggests that factors other than the recession’s impact of beneficiaries’ finances were responsible for most of the slowdown.”

Hospitals are doing their part to contain costs while still providing quality service and care. The working paper found that growth in hospital inpatient spending fell from an average annual rate of 4.3% between 2000 and 2005 to 1.7% between 2007 and 2010. It also found that decreased spending on hospital inpatient care, physician’s services and hospital outpatient care – three of the largest service categories– account for the majority of the slowdown.

The CBO working paper supports many of the findings in DaVanzo study released this summer. The DaVanzo study identified the same slowdown in spending overall and in Medicare, and concluded that the slowdown was primarily the result of fundamental structural changes and not a temporary economic trend.  As a result, DaVanzo estimates that we could see further savings of $1 trillion over the next 10 years as the effects of this slowdown are recognized.

The decrease in spending as shown through the CBO and DaVanzo research demonstrate that hospitals are implementing more efficient means of care, leading to cost decreases while also making vast improvements to the delivery of care. Because of the role hospitals play in the spending slowdown and the nature of their reductions in costs, we should expect this trend to persist.

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