Economics, Health Care, Pethokoukis, U.S. Economy

Is Obamacare really responsible for the slowdown in healthcare spending?

The White House

The White House

The White House is trumpeting as “historically unprecedented” the recent slowdown in healthcare spending, while also suggesting that the Affordable Care is playing a big role. From 2010 through 2012, the real per capita annual growth rate of national health spending was just 1.3%, less than one-third of the long-term historical average growth rate of 4.5%. It was also way below the average 2000-2007 growth rate of 3.9%. All of which is good  fiscal news, helping reduce projections of future Medicare and Medicaid spending by through 2020 by $147 billion.

So what is driving the slowdown? AEI’s Joe Antos:

A major reason for the slower growth is the sharp recession in 2007-09, followed by the anemic recovery. TheKaiser Family Foundationestimates that 77 percent of the slower growth is due to the weak economy. Slower spending growth primarily due to a poor economy and high levels of joblessness is not a welcome trend.

Other analysts dispute the importance of a slow economy in reducing health spending growth. One can debate the numbers. One cannot debate that federal policy has not been successful in bringing the economy back to life.

The Congressional Budget Office attempted to discover what is causing the slowdown in Medicare spending, and essentially came up empty-handed. Without a clearer understanding of what is going on, it seems risky to assume that the slowdown will continue well into the future-and ill-advised to base policy on that assumption.

And as I have written: a) lots of breakthrough drugs from the 1980s and 1990s became widely available in generic form in the 2000s; b) health insurance plans became more diverse, giving consumers more choice, such as health savings accounts; c) the IT and networking revolution has improved disease management. And along those lines is a JPM analysis focuses particularly on the increase in high-deductible, employer-provided health insurance, frequently paired with a health savings account. In 2012, 9% of workers with insurance from an employer were enrolled in a high-deductible plan — more than double the percentage from just three years ago. The product may be limiting consumer demand:

One circumstantial piece of evidence that this may be holding back spending is the composition of health care consumption. Higher deductibles may make one think twice about elective care for annoying but not debilitating conditions, whereas it probably won’t do much to deter one from visiting the hospital for a serious or life-threatening condition. Such a pattern appears in the recent data, as outpatient care has slowed markedly, whereas hospital care is expanding at about pre-recession levels.

Credit: JPMorgan

Credit: JPMorgan

As for Obamacare, I wouldn’t rule out that is now having an impact. We’ll see.



18 thoughts on “Is Obamacare really responsible for the slowdown in healthcare spending?

  1. I wonder if your firm has a tally on how much the 2008 market crash has actually cost the USA Government that has contributed to the National Deficit? Also, how much has the legislative blockade by the Republican led Congress cost the USA Government?

  2. Once again Mr P tinkers around the edges. High deductibles are already history when the real money gets spent (and so is coverage from those $50k annual cap individual policies that people think are so great.) And if bone marrow transplant/designer cancer drug/medically induced coma/premie life support is in the cards, no one is asking the doc how much it costs. Medicine was, is and ever shall be an irrational marketplace. Exhibit A: studies that show expensive placebos work better than inexpensive ones.
    It’s not only the marketplace where consumers equate price and quality, but it pretty much dooms any consumer-driven cost containment strategy.

    • Once again, you’re a moron.

      “High deductibles are already history when the real money gets spent “

      What the fuck does this even mean, Turd?

      The real money is getting spent now, mostly by people who used to have it – i.e. “the rich” by your insipid pseudostandards.

      The reason why Obamascare will fail is because, as I have explained to your ignorant ass (and your fellow ignorant traveler LarryG) numerous times, there is no “marketplace.” It doesn’t exist. The Obamascare marketplace was fictional from inception, even moreso now since the website is garbage, but it will fail more even after that.

      Know why? Because it tries to repeal the laws of economics, specifically forcing people into plans which make them worse off, and then destroying what little choice they may have had in the remaining private insurance market, which is about to disappear entirely.

      Let’s revisit my fortnight ago query of you: what do you think will happen next year when this shit fully kicks in, Turd?

      Hint: Obamascare is a massive tax.

        • Moron, you no get baby healthcare any more thanks to Obamascare elimination of provider services.

          No baby care, no baby live. No money.

          Turd believes he is entitled to destroy everone elses healthcare so his whore wife can scam the system.

          • As usual, you assume facts not yet in evidence. (The sky is falling! the sky is falling!)

            You ask how can we afford $2M for a preterm baby. I ask how is that the Canadians can run neonatal intensive care for a fraction of the US cost.
            “In 2002–2003, the average cost for Canadian “In 2002–2003, the average cost for Canadian hospitals per NICU admission was $9,700.”
            In the US it’s not unusual to spend $10k/ A DAY.

            I’ll overlook your slur of my wife because you are an idiot.

          • As usual, you have no fucking clue what you’re talking about, despicable Turd.

            The effect of socialized medicine/Obamascare will be to reduce both quality and quantity of service. This always happens. It is an economic tautology.

            Hope your whore wife has a nice time scamming the system before she gets offed.

          • Hey scumbag, ask the Brits how their system is working out.

            Your Canadian reference is a joke, like your whore wife.

          • Mesa is puzzled as usual, this time over the difference between hypothetical and real. His bud, Paul, offers to help. “Would you have sex with Mitch McConnell for a million bucks?” Paul asked. “Hell yes,” Mesa answered. “Well,” Paul offered, “hypothetically you are a millionaire. In reality, you are a whore.”


          • Ah yes, the joys of rationing the shit out of health care. Can sorta function when you have the United States absorbing much of the spillover and front end costs next door and 90% of your inhabitants live within 100 miles of the border:

            Women with high-risk pregnancies in three provinces have been sent at taxpayers’ expense to
            give birth in the United States, where fragile infants spend weeks to months in hospital neonatal
            intensive-care units.
            Expectant mothers from British Columbia, Alberta and Ontario have been sent to four U.S. states,
            a development some attribute to an increase in the number of premature births, a nursing
            shortage and a stretched health-care system.

            Read more about the awesome system Turd and his fellow redistributionists want to shove down our throats:


            Here’s another heartwarming story:

            For nearly a month, health officials have maintained there was no hospital anywhere in Canada that had four open neonatal beds to care for Jepp’s babies.

            The 35-year-old was transferred Aug. 10 to Great Falls, Mont., where she gave birth to four identical girls.


          • Turd Man,

            Nice try Paul. Hospital beds aren’t keeping up with the oil boom in western Canada.

            LOL Turd, the bureaucracy determined there weren’t beds anywhere in Canada so they flew(!) an incredibly pregnant lady to the US where there were plenty. Of course there was some dispute over actual availability in Canada afterwards, which just demonstrates what a clusterf*ck it is when you put government in charge.

            I’m writing a new song about central planning. Here are the opening lyrics: “Welcome to the Hotel CaliTURDia. You can pay up front any time you like, but you can never check in.”

  3. I’m quite sure it is, Jimmy, because when people are scared shitless that they are going to pay for their own care, at massively inflated prices, courtesy of government interference, that tends to have a dampeing effect on their expenditures.

    In economics, this is called turbo price theory.

  4. With a series of consecutive lower lows and lower highs, it appears that an unambiguous downtrend as a percent of GDP has been in place for decades with the most recent downturn somewhat more depressed that is reasonably explainable by a subpar or “punk” economy that has been accompanied by very weak jobs growth, declining labor participation rates and broadly based, declining household incomes. Bottom line, ObamaCare appears not to have moved, or contributed minimally to moving, the needle to the downside.

  5. I am no fan of Obamacare, but Ouch! You are placing a graph of growth in healthcare expenditures. You can try to persuade logically or just use emotions. You do the second.

    Since 1966, according to those graphs, every American’s expense on health care went up 9 times! So what if there was a bit of a slow down or speeding up of GROWTH. None of these are solutions to the enormous greed of the health care industry and their stifling of real competition.

  6. 6. Unplug…mostly. Checking email or voice mail constantly on vacation is no fun. But there’s nothing wrong with allocating 20 minutes every other day to reminding yourself that your colleagues are competent people. Check your email, see that they’re putting out any fires, and relax.

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