On Monday, the Centers for Medicare and Medicaid Services (CMS) released their annual update on health care spending growth, showing that 2012 was another year of slow cost growth and lending further insight into the burning question of what’s causing the recent slowdown.
- Health care cost growth, across-the-board, continues to remain subdued.
- The Baby Boom generation is hitting retirement. “Enrollment in Medicare for all beneficiaries (fee-for-service and Medicare Advantage) jumped 4.1 percent in 2012—the largest one-year increase in enrollment in thirty-nine years.”
- Medicare Advantage plans are getting really popular. The private insurance plans offered as an alternative to traditional Medicare, primarily in the form of closed network health maintenance organizations (HMOs), were chosen by “more than half” of new Medicare enrollees in 2012.
- High-deductible plans continue to grow in popularity. “Net enrollment gains in high-deductible plans contributed to the slow growth in premiums. Enrollment in high-deductible health plans, which generally have lower premiums and higher cost sharing than other more popular plans, accounted for 19 percent of all covered workers and 31 percent of the under-sixty-five insured population in 2012.” The growing use of high-deductible plans and more limited networks among the under 65 population might help explain the increasing popularity of Medicare Advantage plans when those people turn 65.
- The “Patent Cliff” is lowering health care spending. Part of the explanation for the recent health care slowdown is generally attributed to a slowdown in prescription drug expenditures, and the authors show that a few blockbuster medications going off-patent in 2012 reinforced this trend. It is unclear, however, what the recent deceleration in the development of high-volume, life-changing drugs portends for future innovation.