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Health-Care Cost Slowdown Seen Saving Up to $770 Billion

• Alex Wayne via

People with health insurance saw increases in their medical costs slow from 2009 to 2011, signaling potential structural changes in the industry that could cut health-care inflation and save the U.S. hundreds of billions of dollars, according to two studies.

The changes include greater use of generic drugs, higher out-of-pocket costs and more efficient care, a trend encouraged by the 2010 health-care overhaul, said David Cutler, a Harvard University health economist. If they permanently slow growth, the U.S. may reap $770 billion in unexpected savings from projected expenditures by 2021, wiping out a fifth of the budget deficit, one of the studies found.

The research, published today in the journal Health Affairs, suggest that while the recession accounted for almost 40 percent of the decline, hitting those who can’t afford medical care, other factors also were at work. The analysis will be part of the debate between President Barack Obama and Republicans over how to control spending growth for Medicare and Medicaid.

“Folks have gotten the message: The money flows are going to be different, and they’re very much responding to that,” said Cutler, who co-authored one of the reports.

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