Health care spending as part of the overall economy shrunk slightly in 2012, the first time since the Clinton administration that health care spending actually shrank as a percentage of the economy. The big question for economists is
why, exactly.
"There are two explanations," says David Cutler, a Harvard economist who served as a health care adviser in President Obama's 2008 campaign. "One is the recession was a big and drunken episode that has a very long hangover. The alternative view is that something big has actually changed."
The new data, published in the journal Health Affairs, showed health spending grew by a relatively slow 3.7 percent in 2012, about one percentage point slower than the rest of the economy. That meant health care shrunk as a percent of gross domestic product, falling from 17.3 percent in 2011 to 17.2 percent in 2012.
We have had a very long hangover from this recession, and it has created a lot of uninsured people. Any nonessential medical care is one of the things sacrificed in personal economies when times are bad. Additionally, patents for some major, highly used prescription drugs expired, making much cheaper generics available. These things are undoubtedly contributing to the shift. But it's also possible that the Affordable Care Act is actually bending the cost curve. Medicare spending in particular has slowed, still growing but at slower rate than pre-ACA. This is another data point that will be interesting to watch in the next few years as so many more people get access to health care from Obamacare.