Saturday, July 26, 2014 · 5:09 a.m.

State health care spending mirrors national trend

Spending has grown at historically low rate in past three years

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Local leaders with BCBST said they will spend time this year looking at whether their spending trend mirrors the national pattern. In the past three years, national spending on health care has grown at historically slow rates. (Photo: MGNOnline)

In the past three years, national health care spending has grown at a historically slow rate, and Tennessee is following a similar pattern.

“I have observed that Tennessee pretty much follows the national trend,” Dr. Cyril F. Chang, economics professors at the University of Memphis, said. “So we are not ahead, but we are not behind what’s happening at a national level.”

For the past three years, the increase in health care spending has been 3.9 percent—the lowest annual rates recorded in the 52 years that government leaders have been collecting data, The New York Times reported.

In 2011, national health care spending increased to $2.7 trillion. That’s an average of $8,700 per every person in the country, according to The New York Times.

“The good news is that the increases have slowed, but in terms of the total dollars we spend, we are way ahead of every [other country],” Chang said.

Locally, leaders with BlueCross BlueShield of Tennessee said they have seen the spending reports. But they haven’t had a chance to look at the study in-depth, Dr. Steven Coulter, president of the BlueCross BlueShield of Tennessee Health Institute, said in a prepared statement.

“It is a topic we will likely look at from a Tennessee perspective sometime this year,” he said.

BCBST leaders do know that the number of claims paid to members and what that cost is.

Coulter said the number of claims rose 9 percent from 2010 to 2011, and the dollars spent to pay them increased about 11.5 percent, Coulter said.

Leaders are still working to compile data for 2012, he also said.

Most people agree that health care spending needs to be controlled, but there is less concurrence about what is driving costs, according to the Kaiser Foundation.

And Chang said there is some debate about why spending has slowed in the past three years.

Why the slowed spending?
Chang said there are a couple of theories about why spending has slowed in the past three years.

“Most people subscribe to the recession theory—that is that the protracted recession finally arrived at the door of health care,” he said. “Health care usually is immune to the ups and downs of the economy, but this time, the duration and the depth of the recession have finally gotten to health care.”

Federal officials said they can't say for sure whether the spending trend is a reflection of the recession, which lasted from December 2007 to June 2009, according to The New York Times.  

But there is trouble with the recession theory, Chang said.

Medicare spending has also slowed, and Medicare shouldn’t be vulnerable to the recession. Medicare is a federal health insurance system that guarantees access to health insurance for people age 65 and older. And that wouldn’t stop during a recession.

“Medicare spending has slowed down at the same rate as every other insurance group,” Chang said. “It has got to be something else, but nobody can come up with a convincing theory.”

Chang thinks the country is on the edge of a change in health care spending.

He said that during the past 10 years, public and private leaders have implemented cost-containment measures that are finally catching up to the country, he said.

Many people are realizing that more spending doesn’t assuredly mean better overall health.

“The system is not sustainable—we have to change the way we do business,” he said.

And Chang said that, moving forward, the key is smart spending. 

For example, good health needs to be promoted to cut down on the number of chronically ill people, he said. 

And then the health of the chronically ill needs to be managed so that they can avoid frequent hospital visits. 

And he said that insurance companies need to pay providers for quality health care.

"We already spend more than anybody else," he said. "It's not going to help us if we continue the way we spend our money the way we've been doing the last 30 years. We've got to spend money smartly."

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