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ACA Agonistes
The Health Spending Slowdown (with a Side of Shrinkage)

For the fourth year in a row, the rate at which health care costs are growing has slowed down. But this time it’s extra-special: for the first time new data also finds that health care costs shrunk as a percentage of the economy in 2012. ACA supporters have jumped on these trends as the latest piece of evidence that the law is working well (e.g. this op-ed at the WSJ).  But the WaPo story on this new data shows the fragility of that kind of interpretation:

Federal officials caution that the current slowdown looks similar to the other periods that have followed a recession, where health spending tends to tick upward at a slower rate than the rest of the economy. They also said that the Affordable Care Act has had a “minimal” impact on health care spending. At most, they believe the law increased health spending by 0.1 percent between 2010, when it was passed into law, and 2012.

“The trends we’re seeing in the last few years are consistent with the historical relationship between health spending and overall economic growth,” says Micah Hartman, a statistician in Medicare’s office of the actuary.

In addition, as we noted before, other trends like the rise of high deductibles are key factors here. Not only is there little reason to conclude that Obamacare is causing the slowdown; what evidence we do have suggests costs could go up under the ACA. The recent Oregon study about Medicaid costs showed us that Obamacare isn’t primarily about making health care less expensive to the nation as a whole, but about making individuals more economically secure. The sooner we stop giving Obamacare credit for things it isn’t doing, the better picture we can get of where the law really leaves us, and what future reform will require.

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  • Thirdsyphon

    That’s all as may be; but the longer the trend of slowing growth in healthcare costs continues, the less important the entire subject becomes. Personally, I don’t have any idea what’s making this happen, but the fact that it’s happening makes me extremely reluctant to embrace any further “reforms.” To quote the great Yogi Berra, “If it ain’t broke, don’t fix it.”

  • S.C. Schwarz

    Obamacare is not the reason for the recent slowdown in health spending. See for a full discussion, but, in brief summary the cost containment features in Obamacare are either pilot programs or are years away from being implemented,

  • charlesrwilliams

    Health care spending is not the same thing as health care costs. Spending is going up more slowly than GDP because the standard of living for many people is going down.

    It is a fallacy to think that health care spending as a whole is some kind of necessity. It is a mixture of necessary and discretionary activity. Even necessary health care has discretionary cost elements in it.

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