A New Way of Measuring Health Costs Sheds Light on Recent Health Spending Trends

National health spending started to grow more rapidly recently after several years of unusually slow growth. This analysis from the Kaiser Family Foundation and the federal Bureau of Economic Analysis helps to dissect why that may be happening.

Using recently-released disease-based health spending data compiled by the federal government, the analysis finds that the drivers of health spending growth shifted in the years following the Great Recession. The number of people treated for various diseases picked up, but that was offset early in the economic recovery by slower growth in the cost of treating those diseases (including prices).

Three factors likely influenced the spending trends: the economic recovery, which led to more people seeking treatment; the Affordable Care Act (ACA), which expanded coverage of preventive care services, correlating with an uptick in the number of treated cases; and a phenomenon known as the “patent cliff,” which held down drug prices, as patients substituted generics for brand-name versions of prescription drugs following the expiration of a large number of patents.

The analysis finds that use of preventive services increased sharply in 2011 and 2012, coinciding with the ACA requirement that most plans cover a variety of preventive services without cost-sharing.

The brief is part of the Peterson-Kaiser Health System Tracker, an online information hub dedicated to monitoring and assessing the performance of the U.S. health system.