Don't Break Out the Champagne: Slowdown in Health Spending Growth Unlikely to Last

Health Affairs Article: Long-Term Gap Between Health Spending and Income Growth Likely to Continue

Media Advisory
Jan. 8, 2008

FURTHER INFORMATION, CONTACT:
Alwyn Cassil (202) 264-3484 or acassil@hschange.org

WASHINGTON, DC—The continued slowdown in personal health care spending growth in 2006 reported by government economists is unlikely to last, according to a perspective by economist Paul B. Ginsburg, Ph.D., of the Center for Studying Health System Change (HSC) published in the January/February Health Affairs.

In an accompanying Health Affairs article, government economists reported that personal health care spending—the portion of national health care spending that accounts for health care goods and services—continued to trend down slightly in 2006, growing 6.6 percent. The comparable growth rate in 2005 was 6.8 percent.

In the perspective, Ginsburg predicts the continued slowdown in personal health care spending growth will be short-lived. Research on local health care markets suggests that rapid expansion of provider capacity and incentives to increase volume of care are continuing. Increasing incidence of obesity is a major factor behind rising costs, and the influence of the economic cycle on health spending, which has lowered the trend in recent years, is likely to reverse its impact shortly.

"It would be a stretch to conclude that the corner has been turned in dealing with the long-term gap between growth in health spending and growth in income and the resulting financial pressures," Ginsburg writes.

The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nation’s changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by the Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.