Has Obamacare really 'bent the cost curve' for health care spending?

No, say AEI's Thomas Miller and Abby McCloskey writing in the Wall Street Journal.

You may have heard the president boast about Obamacare's effect on the rate of growth in health care spending:

"I'm not going to walk away from something that has helped the cost of health care grow at its slowest rate in 50 years," he said. On Wednesday, the White House Council of Economic Advisers published a report claiming that "the ACA is contributing to the recent slow growth in health care prices and spending."

The authors refer to this claim as bordering on "nonsense."

National spending on health care is projected to reach a record $2.9 trillion in 2013, according to the Centers for Medicare and Medicaid Services. This is more than 25% above pre-recession spending levels in 2007. Health-care expenditures per capita and as a percentage of GDP are also at record highs, expected to top out this year at $9,216 and 18% respectively.

The only apparent bright spot is that the average annual rate of health-care spending increases has slowed. Over the past three years, growth in health-care spending averaged 3.9% year-over-year, considerably slower than the historical average.

However, annual health-spending growth rates began to decline a decade ago. In 2002, health-care spending grew by nearly 10% in a single year. The growth rate dropped to 7.1% in 2004, 6.2% in 2007, and bottomed out at 3.9% in 2009-the worst year of the Great Recession, where it has stayed ever since. ObamaCare was enacted in 2010.

CMS and the Congressional Budget Office attribute the general slowdown in health-care spending increases over the past decade to a variety of factors, including increased cost sharing in private health plans and a slower rate of introduction of new health technology. An Urban Institute analysis points to how the mix of health-care payers has shifted over the past decade toward lower-paying government programs providing a greater share of coverage (particularly Medicaid).

Still, the recession is recognized by objective analysts as the single largest driver of slowed health-care spending in recent years. Many who lost their jobs lost their health insurance. Tight on cash, they opted out of surgery, hospital visits and prescriptions.

Changes in health-spending growth rates traditionally lag about two years behind changes in national economic growth. In September 2013, CMS reported that the depth and severity of the recession was more substantial than expected and revised its spending estimates downward accordingly.

Health care costs dropped twice as fast under Bush as Obama. And the rate of spending increases hasn't budged since 2009 - a year before the ACA was passed.

We're still spending far too much on health care as a country. By 2022, the authors point out we'll be devoting 20% of GDP to health care costs even with Obamacare.

The president said in 2009 that, by the end of his first term, American families would be saving $2500 in premiums a year. This has never materialized and is another Obamacare promise that is being honored in the breach. It is simply dishonest to say that Obamacare is saving anyone any money at all and has utterly failed to "bend the cost curve down" on health care spending.




No, say AEI's Thomas Miller and Abby McCloskey writing in the Wall Street Journal.

You may have heard the president boast about Obamacare's effect on the rate of growth in health care spending:

"I'm not going to walk away from something that has helped the cost of health care grow at its slowest rate in 50 years," he said. On Wednesday, the White House Council of Economic Advisers published a report claiming that "the ACA is contributing to the recent slow growth in health care prices and spending."

The authors refer to this claim as bordering on "nonsense."

National spending on health care is projected to reach a record $2.9 trillion in 2013, according to the Centers for Medicare and Medicaid Services. This is more than 25% above pre-recession spending levels in 2007. Health-care expenditures per capita and as a percentage of GDP are also at record highs, expected to top out this year at $9,216 and 18% respectively.

The only apparent bright spot is that the average annual rate of health-care spending increases has slowed. Over the past three years, growth in health-care spending averaged 3.9% year-over-year, considerably slower than the historical average.

However, annual health-spending growth rates began to decline a decade ago. In 2002, health-care spending grew by nearly 10% in a single year. The growth rate dropped to 7.1% in 2004, 6.2% in 2007, and bottomed out at 3.9% in 2009-the worst year of the Great Recession, where it has stayed ever since. ObamaCare was enacted in 2010.

CMS and the Congressional Budget Office attribute the general slowdown in health-care spending increases over the past decade to a variety of factors, including increased cost sharing in private health plans and a slower rate of introduction of new health technology. An Urban Institute analysis points to how the mix of health-care payers has shifted over the past decade toward lower-paying government programs providing a greater share of coverage (particularly Medicaid).

Still, the recession is recognized by objective analysts as the single largest driver of slowed health-care spending in recent years. Many who lost their jobs lost their health insurance. Tight on cash, they opted out of surgery, hospital visits and prescriptions.

Changes in health-spending growth rates traditionally lag about two years behind changes in national economic growth. In September 2013, CMS reported that the depth and severity of the recession was more substantial than expected and revised its spending estimates downward accordingly.

Health care costs dropped twice as fast under Bush as Obama. And the rate of spending increases hasn't budged since 2009 - a year before the ACA was passed.

We're still spending far too much on health care as a country. By 2022, the authors point out we'll be devoting 20% of GDP to health care costs even with Obamacare.

The president said in 2009 that, by the end of his first term, American families would be saving $2500 in premiums a year. This has never materialized and is another Obamacare promise that is being honored in the breach. It is simply dishonest to say that Obamacare is saving anyone any money at all and has utterly failed to "bend the cost curve down" on health care spending.




RECENT VIDEOS