Health Care Trend Falling

According to a CMS report published in the latest issue of Health Affairs, health care spending increased 6.9% in 2005--the third consecutive year it has fallen.

Given that medical cost trend, as reported by the health plan industry, fell again in 2006, I fully expect CMS to report a 2006 trend rate of around 6.5% when they do their calculation again next year. And, given that trend looks to be falling still further in 2007, I expect we will see five straight years of lower trend right around 6% by the time the 2007 numbers are in.

There are differences between overall health spending as reported by CMS and health plan trend rates used to calculate the new insurance rates--but these two numbers are close together and tend to move in tandem.

Will medical trend rats fall even further. What is driving this? What does this mean for the long-term public policy debate?

I dealt with these issues in two recent posts:

Whey is Health Care Cost Trend So Low?

How Low Will Health Care Cost Trend Go?