National report: Some increase in health care spending for 2012

Total health spending increased by 3.7 percent to $2.8 trillion, or $8,915, per person, according to the report from the Centers for Medicare and Medicaid Services. That’s still more than twice the overall increase in consumer prices of 1.7 percent for 2012.

CMS officials said lingering effects from the recession, a drop in government nursing home reimbursement, and a slowdown in prescription drug prices brought on by a large number of pharmaceuticals becoming available in generic form were among the main factors keeping cost increases down.

Although some insurance reforms from the Affordable Care Act, or Obamacare, were in effect, their effect on spending was small in 2012 officials said. It’s not clear what impact the bumpy start of enrollment and other changes will have on 2013 numbers.

Here are five things from the report that consumers should know:

  1. Households (consumers) chipped in $792 billion toward premiums, copayments and deductibles, with out-of-pocket spending up 3.8 percent over the year before. Higher deductibles through the health exchanges and many employer plans will likely continue to drive this number up.
  2. Private money paid for 56 percent of health care, with 21 percent from businesses and 28 percent from households (this counts payroll taxes to support Medicare). The federal government paid 26 percent of health costs, state governments the remaining 18 percent.
  3. Don’t expect drug savings to continue. An unusually large number of costly drugs lost patent protection in 2011 and 2012, a “patent cliff” creating a one-time generic bonus.
  4. Spending on hospital care (up 4.9 percent) and physician and clinical care (up 4.6 percent) were up both because of more patients and more services per patient, a trend that’s likely to continue.
  5. The overall share of the economy (gross domestic product) devoted to health care actually declined, to 17.2 percent in 2012, down from 17.3 in 2011. That hasn’t happened since 1997, when managed care restrictions and federal budget cuts  shaved health spending.
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