It is, unquestionably, the most important question in budget policy: How quickly will health spending grow?
For decades, health-care costs have grown faster than the rest of the economy. That has required the federal government to devote an ever-growing chunk of its budget to health insurance programs. That is the simple, central fact behind our long-term budget problem…
But something weird started happening in 2009, something that throws all of our budget debates into question: Health spending growth slowed.
During the economic downturn in 2009 and 2010, health-care costs grew at their slowest rate in decades. New data released Tuesday showed that slowdown continuing through 2011, with health-care spending growing by 3.9 percent for the third consecutive year.
Health-care costs grew slower than the rest of the economy in 2011 for the first time in more than a decade. For health policy analysts, that’s huge: When they try to get really aggressive on controlling costs, they usually aim for cost growth that is 1 percent higher than the rest of the economy.