CMS: Nursing home Medicare cuts helped keep healthcare spending at historic low levels

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CMS: Nursing home Medicare cuts helped keep healthcare spending at historic low levels
CMS: Nursing home Medicare cuts helped keep healthcare spending at historic low levels

Dramatic Medicare cuts to skilled nursing facilities played a significant part in keeping healthcare spending low in 2012, the Centers for Medicare & Medicaid Services announced Monday.

While hospital, physician and clinical services spending increased in 2012, health spending as a share of gross domestic product decreased slightly, from 17.3% in 2011 to 17.2%. This was due to slow growth in nursing home, prescription drug, private health insurance and Medicare expenditures, according to the annual report from the CMS Office of the Actuary.

Growth in nursing home spending plunged from 4.3% in 2011 to 1.6% in 2012, CMS found. This was in large part because the agency enacted a one-time Medicare rate reduction of 11.1%.

Medicaid spending also continued to grow at what CMS termed “a historically low rate.” A healthier economy slowed enrollment and state cost control efforts played a role as well, according to the report.

Observers speculated that the White House would be quick to credit the Affordable Care Act for the slow growth in healthcare costs. However, the report itself emphasized that the ACA had a “limited effect” because it was not fully implemented in 2012. Analysts attributed the slow growth in spending mainly to continued effects of the severe economic downturn that began about six years ago. Still, the healthcare reform law has played a role in containing costs, according to the report, and CMS Administrator Marilyn Tavenner emphasized the ACA when commenting on the findings.

“For the second straight year, we have seen overall healthcare costs grow slower than the economy as a whole. This is good news,” she said. “We will continue to work with tools given to us by the Affordable Care Act that will both help us control costs for taxpayers and consumers while increasing the quality of care.”

The complete report will be available on the National Health Expenditures website. A commentary will appear in Health Affairs.

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