Health care costs slow; federal deficit benefits

WASHINGTON -- A sharp and surprising slowdown in the growth of health care costs is narrowing the federal deficit, leaving budget experts trying to figure out whether the trend will last and how much the slower growth could ease the country's fiscal problems.

In figures released last week, the Congressional Budget Office said it had erased hundreds of billions of dollars in projected spending on Medicare and Medicaid.

The budget office now projects that spending on those two programs in 2020 will be about $200 billion, or 15 percent, less than it projected three years ago.

New data also show overall health care spending growth continuing at the lowest rate in decades for a fourth consecutive year.

Health experts said they do not yet fully understand what is driving the lower spending trajectory. But there is a growing consensus that changes in how doctors and hospitals deliver health care -- as opposed to merely a weak economy -- are playing a role.

Still, experts disagree on where spending might be in future years, a question with major ramifications for the federal deficit, family budgets and the economy.

Part of the slowdown stems from "the recession and the loss of income and wealth" causing people to cut back on health care, Douglas Elmendorf, director of the Congressional Budget Office, said last week.

But he said a "significant part" of the slowdown "probably arises from structural changes in the health care system."

Some insurers

Many of the changes predate the 2010 health care overhaul, but the law has contributed to the changes by offering financial incentives, health care experts said.

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Health care costs slow; federal deficit benefits

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