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Reports measure post-recession dental economy

Bethesda, Md. – National dental spending estimates from the Centers for Medicare & Medicaid Services suggest the dental economy is gaining traction. But an Association analysis indicates that per capita dental spending has remained flat since 2008.

Post-recession expansion of the dental economy continued in 2011 spurred by the fastest rate of growth in consumer out-of-pocket spending for dental services since 2008, analysts said in the government's annual health spending report.

However, after decades of growth, the average amount a person spends on dental care has flattened and has not recovered since the recession, according to the ADA Health Policy Resources Center. Inflation adjusted per capita dental spending began slowing well before the recent economic downturn, HPRC researchers said.

HPRC's "An analysis of dentists' incomes, 1996-2009" in the May 2012 Journal of the American Dental Association suggests this flattening trend is driven by a downturn in dental care utilization among adults and that "average real net income for dentists may not necessarily recover to prerecession levels once economic conditions in the United States improve."

Annual inflation adjusted per capita dental spending has been flat at around $350 since 2008. This contrasts with a 3.9 percent annual growth in "real" or adjusted per capita dental expenditures from 1990 through 2002 and the tapering off 1.8 percent annual growth 2002-2008. Although consumer out-of-pocket spending increased from 2008-2011, as the government report says, dental spending as a share of total personal health care spending declined from 5.1 percent to 4.8 percent over the same period.

The dental economy grew by 3 percent to $108.4 billion in 2011 from $105.3 billion in 2010, the CMS Office of the Actuary reported Jan. 7 in the journal Health Affairs. Growth in total health spending, $2.7 trillion, remained at 3.9 percent for the third consecutive year.

The recession began in December 2007 and officially ended in June 2009. However, its effect on the health care sector of the economy persisted, which is typical following economic downturns, the CMS National Health Expenditure Accounts team said.

By several NHE measures, the dental economy is growing again albeit modestly and nearly in step with the general health economy. Dental spending increased by 5.2 percent to $102.4 billion in 2008, leveled off in 2009 and grew by 2.7 percent in 2010. Patients paid $45.5 billion out-of-pocket in 2008, or 5.8 percent more than in the previous year, but reduced out-of-pocket dental payments to $43.1 billion in 2009, a 5.3 percent cutback. Out-of-pocket dental spending held steady at $43.4 billion in 2010 and expanded by 4.1 percent to $45.1 billion in 2011.

Private and public health insurance including dental benefits covered $62.8 billion of the 2011 dental bill and other third party payers made up the $500 million difference.

Hospital out-of-pocket spending also increased sharply in 2011, but the faster growth in dental and hospital out-of-pocket spending was partially offset by a decline in such spending on prescription drugs, in part because of reduced costs for Medicare beneficiaries with drug costs, the NHE team reported.

The dental share of the $307.7 billion that consumers spent out-of-pocket for all health services in 2011 was 14.7 percent, but that proportion has declined from a recession high of 15.5 percent in 2008.

"In 2011, there were some signs of change, evident in faster growth in nonprice factors such as the use and intensity of health care goods and services," the health care spending report concluded. "Additionally, insurance coverage expanded in 2011 for dependents under age twenty-six, and overall private health insurance coverage did not decline as had been experienced in the prior three years.

"Nonetheless, economic, income and job growth in 2011 was modest and less than might normally be expected during an economic recovery. This fact raises questions about whether the near future will hold the type of rebound in health care spending typically seen a few years after a downturn. Data for the years 2012 and 2013 will provide important indications of the state of the U.S. health system as the major insurance expansions associated with the Affordable Care Act grow nearer on the horizon."

The Centers for Medicare & Medicaid Services expects to issue a report this summer projecting dental and other health expenditures through 2022.