Updated Jan. 6, 2014 7:20 p.m. ET
Slower growth in prices for medical products and services helped keep the rise in health-care spending below 4% for the fourth straight year in 2012, the government said, though the numbers did little to settle the debate over whether the trend can be sustained.
Economists say health-care costs are the biggest driver of the nation's long-term fiscal problems, and until the economic shocks of 2008 those costs seemed to be growing unstoppably. Since 2010, however, health spending has risen roughly in line with economic growth, and in 2012 it accounted for 17.2% of gross domestic product, down from 17.3% in 2011.
In 2012, medical prices rose slowly, keeping health spending in check even though the improving economy encouraged greater use of medical services, according to the federal Centers for Medicare and Medicaid Services, which released the data Monday. In particular, some big brand-name prescription drugs went off-patent, allowing for cheaper generics.
The question now is whether the trend of moderate spending growth can continue in 2014 and beyond, when the full effects of President Barack Obama's Affordable Care Act will be felt. Millions of Americans are gaining health-insurance coverage under the health-care law, and CMS predicted last September that health spending would rise 6.1% in 2014 as people use their new coverage.
However, the law also contains steps to curb costs, such as discouraging hospital readmissions and promoting a shift from fee-for-service models in which doctors get paid more for performing more procedures.
"This and more recent data are pretty profound. What it says is that even as the economy is rebounding, health spending is not," said David Cutler, a Harvard University health economist and former adviser to the Obama administration. "It looks less and less like a hangover from a recession and more like a change in the nature of the health-care system."
Others say the slower growth is unlikely to last as the economic recovery continues and new patent-protected drugs come on the market.
"You kind of see things are picking up and 2012 may be the last good year," said Jonathan Skinner, a Dartmouth College economics professor who co-wrote a recent paper suggesting the lull likely won't be long-lived.
CMS said total U.S. health-care spending in 2012 grew 3.7% to $2.8 trillion—similar to the 3.6% increase in 2011 and 3.8% increases in both 2009 and 2010.
The agency's economists attributed the slow growth in part to the post-2008 recession, saying health spending ordinarily rises at a sluggish pace in the years after a recession.
"The relatively low rate of growth over the past four years is consistent with what we've seen in post-recessionary periods in the past," said Aaron Catlin, deputy director of CMS's National Health Statistics Group.
Baby boomers are increasingly becoming eligible for Medicare, which is expected to boost its costs. In 2012, Medicare enrollment rose 4.1%, CMS economists said, the largest one-year jump in nearly 40 years.
John Holahan, an Urban Institute health-policy fellow, said efforts to cut costs in Medicare, Medicaid and private insurance plans have helped keep overall spending in check. "Only way I see it turning around is if we have an economic boom and people say, 'Let's start spending more on health care,' " he said.
Spending on hospital care and home health services grew the most in 2012, CMS found, rising about 5% each. Drug costs grew just 0.4% in 2012, compared with 2.5% the year before, as cholesterol-lowering medicine Lipitor and other popular drugs lost market exclusivity.
Less-generous health plans are forcing patients to pay more attention to prices, with some choosing lower-cost options. Also, the recession that began in 2007 and slow recovery afterward caused price gains to ease in response to weak demand.
More recent data suggest prices are still barely growing. In the third quarter of 2013, health-care prices advanced less than 1% from a year earlier—the weakest gain in a half century, according to previously released Commerce Department data.
In a blog post Monday, the White House said "the Affordable Care Act, for the first time in decades, has helped to stop" the trend of rising health costs. CMS economists, however, said in their report that the law had a minimal effect on 2012 spending.
Write to Amy Schatz at Amy.Schatz@wsj.com
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