CMS report finds lower health spending growth in 2012; generic drugs touted as 'critical to cost control'

WASHINGTON — Growth in health spending has slowed in recent years, including spending by private and public payers, according to data released Monday by the Centers for Medicare and Medicaid Services that also found a small contribution to the lower growth from the healthcare reform law.

In a report published in the journal Health Affairs, the CMS Office of the Actuary said overall national health expenditures grew by 3.7% in 2012, marking a fourth consecutive year of low growth, while health spending as a share of the gross domestic product fell to 17.2% from 17.3% in 2011.

Private health insurance spending increased by 3.2%, less than 2011's 3.4%, while Medicare spending increased by 4.8%, down from 5% in 2011, despite an increase in enrollment. In Medicaid, spending grew by 3.3%, which was higher than in 2011, but it reflected low overall growth rates resulting from improved economic conditions and efforts by state governments to rein in costs.

"For the second straight year, we have seen overall healthcare costs grow slower than the economy as a whole," CMS administrator Marilyn Tavenner said. "This is good news. 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 contribution to lower growth in overall spending from the healthcare reform law was described as "limited" because reforms were still being implemented in 2012.

In addition, prescription drug spending experienced low growth of 0.4% thanks to many branded drugs losing patent protection and the resulting availability of generics.

The Generic Pharmaceutical Association, a trade group representing generic drug makers, said generic drugs were "critical to cost control," pointing to a report it commissioned from IMS Health and released in December showing that generic drugs have saved the U.S. economy $1.2 trillion over the past decade.

"As 2014 witnesses extensive changes in the health landscape, the role of generic medicines in providing patient savings and access to affordable care is critical and unquestionable," GPhA president and CEO Ralph Neas said. "A large proportion of patient and consumer savings is attributable to the increased use of generic medicines, and a decrease in overall spending on prescription drugs."