Ezekiel J. Emanuel on health policy and other topics.

THINK about it. When was the last time you heard the phrases “good news” and “health care costs” in the same sentence?

I can’t remember either.

Most of the recent talk about health care spending has been pretty bleak. Just take a look at the Rate Review Tool on Healthcare.gov and you’ll know why. Major insurers are proposing painful, double-digit premium increases in 2013. In California, Anthem Blue Cross, Blue Shield of California and Aetna all announced rate increases of 20 percent or higher for some of their customers. Many are taking this as a sign that, despite its intentions, the health care reform law is failing and costs are going up as a result.



But there is something bigger going on here, though commentators may not be shouting about it. Health care spending is still going up, but the rate at which it grows year to year has actually been declining for about a decade now.

This is truly a sea change. Look at Medicare: over the last 43 years, costs per beneficiary grew 2.7 percent faster than the overall economy. That’s why Medicare spending rose from $7.7 billion in 1970 (or 0.7 percent of gross domestic product) to $551 billion in 2012 (almost 4 percent of G.D.P.). But this trend has finally reversed; over the last three years, Medicare costs per person have grown 1.3 percent slower than growth in the overall economy. In January, a Department of Health and Human Services report showed that Medicare spending per beneficiary grew just 0.4 percent in 2012. And last week, the Congressional Budget Office lowered its 10-year Medicare spending projection by $137 billion, because “health care spending has grown much more slowly” than “historical rates would have indicated.”

This slowdown is not limited to Medicare, nor is it simply the result of belt-tightening in the wake of the Great Recession. Since 2004 — nearly four years before the economic downturn — the rate of health care inflation per person has been just 0.8 percent higher than the growth of the G.D.P. Between 1965 and 1993, for comparison, it was 3.2 percent higher.

So if the growth of spending is decelerating, why are premiums increasing? First, the big increases were in relatively small parts of the market, among individual and small-business policies. Second, like everyone else in the health care industry, insurance companies are uncertain about the future, particularly about what will happen to their margins when the new exchanges open in October. The natural response to uncertainty is caution, and for insurance companies, the cautious approach is to increase revenue and profits as much as possible in the short term in case Obamacare lowers them in the long term.

But once the exchanges begin to facilitate competition, this fear should dissipate and premiums should come down.

Regardless, the good news on health care costs shouldn’t make us complacent. Despite the slowdown, total Medicare spending is still rising, because more and more baby boomers are becoming eligible for the program every day. The number of beneficiaries is projected to grow 3 percent each year. As a result, total Medicare expenditures are projected to rise to over 4 percent of the G.D.P. by 2023 and to 6.7 percent by 2037. This is a looming threat to the nation’s long-term fiscal stability.

So what more can be done? Here is another piece of good news: there are many common sense reforms that should appeal to both Democrats and Republicans.

One example is competitive bidding. Historically, the government has effectively set prices through Medicare for wheelchairs, hospital beds and other medical equipment. But a demonstration project begun in 2011 introduced competitive bidding in roughly 100 metropolitan areas to see if market forces could bring down prices. The results have been dramatic. Prices for oxygen equipment went down 41 percent; wheelchairs, 36 percent; hospital beds, 44 percent; and the cost of diabetic testing equipment, like glucose strips, dropped by a whopping 72 percent. And research has shown no adverse effects on beneficiaries.

The Affordable Care Act will expand competitive bidding for these items to the rest of the country in 2016. But why wait? We should roll it out nationwide next year. And it shouldn’t just be for medical equipment. In his last budget, President George W. Bush recommended expanding competitive bidding for blood tests and other lab procedures. It could also work for X-rays, CT scans, pacemakers — for all medical commodities. This would drive health care spending growth closer to the increase in G.D.P.

The moderating of health care spending is fantastic news. But now we just have to work harder. If we can push the rate of growth even lower, we will come close to solving our nation’s long-term financial problems.