The Health

It's one of the most important economic questions today: Is the snail-like growth of health costs over the last several years a real trend, or is it merely a temporary part of the Great Recession's aftermath?

The data experts who compile the government's official numbers on health spending lean toward the more pessimistic view. They think the slowdown - to the lowest level of growth on record - stems in large part from Americans skimping on medical care during tough times.

'The pattern observed in recent years is not unique and is consistent with historical patterns,' Anne Martin of the Centers for Medicare & Medicaid Services said after that agency released new numbers this week. The agency's report put the argument this way: 'The key question is whether health spending growth will accelerate once economic conditions improve significantly; historical evidence suggests that it will.'

I can't tell you what's going to happen to health costs in the next several years, but I do think the government's analysts are putting an overly pessimistic spin on the numbers. When you look at the data in its entirety - not just over the last decade or two but going back to the 1960s - you see that the pattern over the last several years is not normal, even for a time of weak economic growth.

The normal pattern over the last 50 years has been for health care to take up a larger share of the American economy with each passing year. It has happened in both good times and bad.

There was an occasional year here and there in the 1960s,'70s and '80s when health care remained roughly flat as a share of gross domestic product. But most of those years (1962, 1965, 1966, 1973, 1978 and 1984) didn't occur during economic downturns. And all of them were followed by a return to health spending growing more quickly than the rest of the economy.

Some of this faster growth was a positive development. As a society gets richer and can comfortably afford basic material goods, it should spend more money on health care. To put the question in personal terms, if someone gave you $30,000 and let you decide between a third car and better health, which would you choose?

The problem in the United States is that we now spend so much money on health care that we appear to be wasting a fair amount of it. On a per-person basis, the United States spends close to twice as much as most other rich countries. With a medical system as bloated as ours, it's much harder to be sanguine about cost growth that continues to outpace the rest of the economy's growth.

Our high health costs, for example, are one big reason income growth has been so slow in recent years. Employers don't have a secret stash of money to spend on health insurance. A dollar that goes toward health benefits is a dollar that can't go toward giving someone a raise. The same goes for state and local governments that must choose between paying for their employees' and retirees' medical care and spending money on roads or education.

All of which offers reason to be pleased with the trends of the last several years. Health spending made up 17.4 percent of economic output last year, the government reported last week, unchanged from its share in 2012, 2011, 2010 or 2009. Doctors, nurses, hospital executives and insurers have all played a role in restraining costs, as an inchoate group of reformers has tried to reduce waste. Their guiding principle has been nudging insurers - private and government - to make payments based less on the quantity of health care provided and more on the quality: A hospital that does more tests and procedures but gets worse results than another hospital with similar patients shouldn't benefit financially.

Those same reformers influenced the law known as Obamacare, and the law also plays a role. One provision has prodded hospitals to reduce the rate at which patients return to the hospital shortly after discharge.

So why are the government's experts (and some others) so pessimistic that the slowdown is temporary? I think they are putting too much weight on recent history. See, there is one other period in the last 50 years that looks like the last few years, and it's recent enough that today's health analysts lived through it: the 1990s.

In the aftermath of the 1990-91 recession and the slow recovery that followed, health spending stopped growing more quickly than the rest of the economy. It accounted for 13.4 percent of economic output in 1996, the same share as it had in 1993.

But the weak economy doesn't seem to have been the main reason. The rise of health maintenance organizations (or H.M.O.'s) - along with other attempts by insurers to hold down costs - was. Consider that the economy started growing rapidly again in 1996, but a suddenly flush American population didn't start buying vast amounts of new medical care. Health spending stayed between 13.3 percent and 13.4 percent of economic output until 2000.

Then a backlash against H.M.O.'s took hold, and health spending started growing rapidly again. The surge didn't end until the last few years, when the efforts of the reformers began to have a widespread effect.

As I said, I can't tell you what the future will hold, but the simple cyclical economic story that some analysts prefer doesn't seem to fit with the historical evidence. It's simply not true that G.D.P. and health costs have historically moved in tandem. On the other hand, the experience of the 1990s demonstrates that a slowdown in health costs isn't guaranteed to persist.

If patients start to rebel against some of the changes that have held down health costs - like narrow networks, which restrict which doctors they can see - spending may start to rise again. It also may start to rise if labor unions manage to undercut a tax on generous health plans or if Republicans succeed in stopping efforts to make Medicare more efficient. (Yes, that's related to the infamous death-panel debate.)

Even without such backlashes, health spending seems likely to pick up. The population will continue aging, and the Affordable Care Act covers more people. But there would be a vast difference between a modest increase and a return to the earlier trends.

The American health care system really is changing. What happens next will be one of the biggest economic stories of the coming decade.

Correction: December 5, 2014