Real spending on health care services has grown at only a 2.1% annual rate since the recession ended, notes a new JPMorgan report. That’s about a full percentage point slower than the pace that prevailed in the decade before the recession began.
Does the economic slowdown explain the the decline, or are there non-macroeconomic factors at play? I wrote the other day about the latter: a) lots of breakthrough drugs from the 1980s and 1990s became widely available in generic form in the 2000s; b) health insurance plans became more diverse, giving consumers more choice, such as health savings accounts; c) the IT and networking revolution has improved disease management.
The JPM analysis focuses particularly on the increase in high-deductible, employer-provided health insurance, frequently paired with a health savings account. In 2012, 9% of workers with insurance from an employer were enrolled in a high-deductible plan — more than double the percentage from just three years ago. The product may be limiting consumer demand:
One circumstantial piece of evidence that this may be holding back spending is the composition of health care consumption. Higher deductibles may make one think twice about elective care for annoying but not debilitating conditions, whereas it probably won’t do much to deter one from visiting the hospital for a serious or life-threatening condition. Such a pattern appears in the recent data, as outpatient care has slowed markedly, whereas hospital care is expanding at about pre-recession levels. [See above chart.]