National Health Spending Slowdown Underwhelms; Obamacare Hurting Middle Class

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from NCPA,

Last week, the media got more than usually excited about the latest National Health Expenditures (NHE) produced by actuaries at the Centers for Medicare and Medicaid Services (CMS). Modern Healthcare reported that “healthcare spending growth hit 53-year low in 2013,” noting that last year’s 3.6 percent growth was the lowest since 1960.

While it is literally true that last year’s increase was the lowest since 1960, growth in 2009 was only 3.8 percent, after 4.8 percent in 2008. You do not need a PhD in economics to conclude that the recession was likely the largest factor. It is hard to detect much more than noise in the annual changes since the recession hit. This is corroborated by the fact that 17.4 percent of Gross Domestic Product is accounted by health care ― exactly the same percentage as in 2009 and every year since.

Nevertheless, CMS’ actuaries allege that Obamacare’s provisions kept a lid on costs, citing:

– productivity adjustments for Medicare fee-for-service payments;
– reduced Medicare Advantage base payment rates;
– increased Medicaid prescription drug rebates; and
– the medical loss ratio requirement for private insurers.

Yes, Medicare spending dropped from 4.0 percent in 2012 to 3.4 percent in 2013. However, Medicare’s enrollment growth also slowed, and the Republican-driven sequestration also held back spending. Medicare spending per enrollee actually rose at the same rate as in 2012. It is hard to see Obamacare’s technocratic cost savings in these figures.

Medicaid spending exploded 6.1 percent. Although government wrangled more discounts from drug makers, this did not compensate for increased Medicaid enrollment and higher fees for providers.

If the rate of spending growth by private insurers is slowing, it is surely caused by something else.

That something is likely consumer-driven health care. NCPA’s Health Policy Blog has discussed much evidence of consumer-driven plans keeping cost growth down. The latest report, from Mercer, reports that consumer-driven plans covered 23 percent of beneficiaries in the employer-based market in 2013. This is up from 3 percent in 2006 and 11 percent in 2010. Employers and employees are attracted to these plans because they manage costs better.

… the share of Americans delaying medical care because of cost has bounced between 29 percent and 33 percent. That figure is likely creeping up because of Obamacare. Remarkably, the increase has almost entirely happened among insured Americans with middle-class and higher incomes. About 34 percent of privately insured respondents reported that they had delayed medical care due to cost in 2014, versus only 25 percent last year. About 28 percent of respondents in households with incomes of at least $75,000 reported delaying treatment, versus 17 percent in 2013.

Obamacare is likely having no effect on health spending. Its most measureable consequence is to significantly increase financial hardship among middle-income and high-income voters. It’s no wonder Democrats like Senator Chuck Schumer are jumping off the bandwagon.

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