OK, But Why Did the Nation’s Health Spending Slow Down?

With the Obama administration revealing today that health-care spending in 2008 saw its smallest rise since 1960, long-time health policy reporter Merrill Goozner points out why the news is not as good as it first appears.

“[D]on’t break out the champagne quite yet,” he writes today. “The slowdown was fed by a million people being dumped from insurance rolls as unemployment skyrocketed.”

The fact that employers cut workers (and therefore health coverage) didn’t mean people stopped getting sick. So health care spending by households grew 4.3 percent last year. And while that was a slower than the previous year’s growth, it was still far more than the 2.7 percent growth in personal income.

And of course, when the unemployed lose coverage, they tend to migrate into safety-net programs like Medicaid, which creates two very different — but very significant — problems. (1) Because Medicaid often underpays for health care services, a good chunk of the nation’s doctors and dentists won’t accept new Medicaid patients, meaning that coverage often doesn’t guarantee care. And (2) the shift to Medicaid squeezes state budgets during economic times when those states can least afford the influx – a systemic flaw that neither the House nor the Senate reform bill addresses.