New rise in health-care spending seen

A historic slowdown in U.S. health-care spending in recent years may be drawing to a close.

An industry report published this week and health-care experts point to a steady rise in medical care being sought by consumers seeing specialists, getting more prescriptions filled, and visiting the hospital. Other factors such as millions of newly insured Americans seeking treatment for the first time and higher prices from health-care consolidation could also help drive up costs.

Experts aren't predicting an immediate return to double-digit increases in medical spending. But the emerging trend underscores how difficult it will be for policymakers, employers, and health plans to control health-care costs going forward.

"2013 was a rebound year for health care," said Murray Aitken, executive director of the IMS Institute for Healthcare Informatics, an industry research firm that released Tuesday's report. "We saw health-care usage overall up for the first time in three years. We think that is reflective of a strong economy, more patients with insurance, and also some pent-up demand for services that may have been delayed or deferred since the economic downturn."

David Gruber, director of health-care research at Alvarez & Marsal, said he was expecting a similar trend of higher demand coupled with consolidation among hospitals and large physician groups pushing up prices. He said the demand for services is being driven by an influx of Obamacare enrollees, aging baby boomers, and people with chronic conditions who can no longer delay care.

"At some point you can't defer anymore," Gruber said. Health spending "isn't going up by double digits, but it could spike to 6 percent or 7 percent."

There are other forces at play that could serve as an effective counterweight and bear watching. The growing use of narrow provider networks by employers and health insurance companies and a shift away from conventional fee-for-service reimbursement for medical providers can be potent cost-containment tools, Gruber said.

From 2009 to 2012, U.S. health-care spending grew annually at less than 4 percent, according to federal data - the lowest rate of growth in half a century.

Many health economists and industry officials have attributed the slowdown primarily to lingering effects of the Great Recession, when millions of Americans cut back on medical care. But the Obama administration and other experts have pointed to fundamental changes in health-care reimbursement and the delivery of care spurred by the Affordable Care Act.