Kaiser Report Finds Healthcare Spending Slowdown Linked to Economy

The record multiyear slowdown of healthcare spending growth is primarily a product of a sputtering economy, and the rate will rise again to alarming levels as the nation's economy gathers steam, according to a study by the Kaiser Family Foundation.

Authors of the study, which included experts from both KFF and Altarum Institute's Center for Sustainable Health Spending, said the economic downturn can explain 77 percent of the slowed growth of national health spending from individuals, employers and government entities. Spending growth rates dropped from 8.8 percent per year from 2001 to 2003, down to 3.9 percent per year from 2009 to 2011, the slowest rate in more than 50 years on government record.

Statistics show a strong correlation between healthcare spending and economic factors, such as gross domestic product and inflation, though the effects are typically delayed by about six years. That means the recession that ended in 2009 will put downward pressure on healthcare spending for a few more years, but that rate will rise as the economy's performance has in years following the recession.

KFF President and CEO Drew Altman coauthored a column published in the Washington Post warning that the slowdown should not suggest that factors that previously sent healthcare spending rates soaring have been fixed.

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