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Bending the Cost Curve
Celebrated Health Care Slowdown Slows Down

The much-vaunted health care spending slowdown may finally be coming to an end. For four years the rate at which health care costs grow has been decelerating, but a new report suggests that 2013 was the beginning of the end of that trend. LA Times has the story:

“2013 was a rebound year for healthcare,” said Murray Aitken, executive director of the IMS Institute for Healthcare Informatics, an industry research firm that released Tuesday’s report. “We saw healthcare usage overall up for the first time in three years. We think that is reflective of a strong economy, more patients with insurance and also some pent-up demand for services that may have been delayed or deferred since the economic downturn.”

This is consistent with what we know about the effect of more people having health insurance: It increases, often by a lot, the amount of health care we consume—and without necessarily delivering better health outcomes. ACA partisans who claimed that the slowdown was partially attributable to the law should take note of the inflationary effect the newly insured will have on the system.

But there may be at least one upside. It’s true that, when people become comprehensively insured, they lose some incentives to consume health care responsibly. But it’s also true that insurance companies have a vested interest in keeping patients healthy so that they pay out fewer claims. In a story yesterday WaPo highlighted the increasingly proactive efforts of insurance companies to keep diabetic patients on track—including arranging rides for them to the doctors office and calling them when they miss appointments. Chronic conditions like diabetes are huge contributors to our health care spending, especially when they aren’t managed properly. We don’t have much evidence yet that insurer involvement can tamp down the otherwise inflationary effects of expanded insurance. But that involvement seems like good news and a potential bright spot amid the otherwise bad news.

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  • Jacksonian_Libertarian

    The only successful way to bring down Prices and improve Quality and Service at the same time, is with the “Feedback of Competition” of Free Markets. Monopolies and even limited Monopolies like US health insurance, where insurance companies have the entire business of an employer, will never be forced to improve or see another company steal their business. With the implementation of Obamacare, we will see an increase in the healthcare monopoly, with the corresponding increase in Prices, and decrease in Quality, and Service. Wait times for appointments will become much longer, equipment will become old and dated, competence will decline, and the Prices for this declining Quality and Service will skyrocket.

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