WaPo gets it wrong again on health care costs
Earlier this week, Sarah Kliff at the Washington Post had an article claiming that American "health costs are growing really slowly" and that "health care costs [are] now growing at the same rate as the rest of the economy." I debunked Kliff's claims on AT a couple days later. Not to be outdone, Ezra Klein at WaPo followed up on Kliff's piece the next day with an article making the following claims:
A Kaiser Family Foundation survey finds that a majority of Americans think health-care costs are rising faster than normal. The reality is precisely the opposite. From 2000 to 2007, national health expenditures grew, on average, by 7.5 percent a year. From 2008 to 2011 -- the most recent data we have -- they grew, on average, by 4.1 percent a year. This is historically slow growth ... Ordinary Americans aren't the only ones misinformed. On Tuesday, House Speaker John Boehner blamed the law for 'causing premiums to soar.' Assuming he continues to believe that any change in health premiums since 2009 is the result of Obamacare, he'll doubtless be pleased to know that the law is causing a historic slowdown in premiums.
The following figure shows the annual growth in American per capita total health expenditures using constant 2005 international dollars on a purchasing power parity (PPP) basis since 1996 (the earliest data we have is 1995, so the first "annual growth" point is 1996 -- the latest data we have is 2011).
The rate of growth in health expenditures increased dramatically between 1997 and 2003, and then declined just as dramatically between 2003 and 2009. But starting in 2009, the health expenditure growth rate has started to climb rapidly again. From 2009 to 2010, the increase was modest but real (2.96% to 3.04%). But look what happened between 2010 and 2011. The rate of increase skyrocketed from 3.04% to 4.55%, bringing annual health expenditure increases up to a level higher than we saw in the mid-1990s.
These recent trends are entirely inconsistent with Klein's claim that "[a]ssuming [Boehner] continues to believe that any change in health premiums since 2009 is the result of Obamacare, he'll doubtless be pleased to know that the law is causing a historic slowdown in premiums." On the contrary, using this reasoning, we find that ObamaCare is apparently causing a rapid increase in health care costs that has -- in only two years -- already offset much of the decline in growth rate obtained between 2003 and 2009.
And for Kliff to claim that "health care costs [are] now growing at the same rate as the rest of the economy" is pure nonsense. In 2009 and 2010, per-capita health care expenditures grew at 3% in real dollar terms, increasing to 4.6% in 2011. What was per-capita GDP growth in real dollar terms during these years? 2009, -4.0% (yes, negative). 2010, 1.5%. 2011, 1.1%. Instead of what Kliff states, we see that health care costs are currently growing more than fourfold faster than the economy.