- Thread starter
- #21
What green beard says on the surface is true but looks are deceiving. Most economists peg 75 percent of the lower costs to a poor economy.
The further we get from the 2007-09, the harder it gets to keep pinning the entirety of the unprecedented era of health care we're experiencing on it. 2014 was the best economic year since the late '90s on a variety of metrics (which, by the way, is itself quite contrary to the doomsday predictions about the ACA's economic impact that were made in the years proceeding its launch), yet underneath the enrollment growth the trend continued.
Here's the Altarum Institute (which tracks health spending and prices) in their latest monthly look at health prices:
For the HCPI as a whole, only 2 of the 10 components saw increases in price growth (nursing home care and dental services). Some of this downward pressure is related to economy-wide price behavior, seen most clearly with durable medical equipment price growth of only 0.2% and price growth for other nondurable medical products actually falling by 1.1%. Yet, the price behavior for hospitals and physicians suggests that something else is happening. Are we seeing the first signs of newfound health care efficiency via insurance exchanges, high-deductible health policies, transparency, and more keeping health care prices contained? Health care and economy-wide inflation are quite low for this stage of the business cycle recovery. January 2015 was the 67th month of economic expansion following the recession, yet we are barely off the decade-plus HCPI low. A return to 2% growth for the HCPI now seems further off in the future.
Meanwhile, here's the editor of Modern Healthcare just a few weeks ago noting what's becoming increasingly clear: "The spending slowdown is real":
Over the past two years, conventional wisdom presumed without offering much in the way of evidence that the lingering recession and the rise of high-deductible and narrow network plans explained the slowdown in healthcare spending, now in its fifth year.
Indeed, most economists and the media echo chamber repeatedly said rapid spending growth would resume once the economy picked up steam, which it has. But healthcare spending growth has not.
The argument that the slowdown was transitory had a shred of plausibility in the privately insured market, where reporting is much less transparent and the impact of higher costs on households—a very real phenomenon—takes time to unfold.
But now, finally, the Mr. Joneses at the Congressional Budget Office have come around to admitting that something is happening here, even if they don't know what it is.Most media accounts last week focused attention on the CBO's significantly lower projections for spending on premium subsidies available under the Affordable Care Act. As recently as January, the government projected over $1 trillion would flow to low- and moderate-income households buying health plans on the exchanges over the next decade.
Now, the CBO projects it will be $209 billion less because of lower overall premiums and—surprise, surprise—a reduction in the number of people who will need coverage. Fewer small and medium-sized businesses are expected to drop coverage because, lo and behold, insurance has become more affordable for employers because of the slowdown. . .
Suggesting the slowdown was transitory never made sense when it came to Medicare. Most seniors are insulated from the vicissitudes of the business cycle. And the last thing anyone would call Medicare is a high-deductible plan with a narrow network. Yet the slowdown has been just as dramatic there as it has been in the private insurance market.
Even the CBO now admits that the healthcare system has begun delivering lower-cost care to seniors. A year before the ACA passed, the CBO expected the CMS to spend $725 billion in 2015. Last week, it projected this year's spending would be just $632 billion, or $11,429 for each of the program's 55.3 million beneficiaries.
Much of the lower costs are because they don't have the number of people enrolling that they anticipated so that subsidies are much less.
As I already noted in the post above, per enrollee spending has fallen by almost a quarter relative to the projections "sold" back in 2010. That's a number that's independent of enrollment.
Besides that, the cost growth slowdown has also showed up in Medicare. Medicare's enrollment isn't affected by external factors, its network is quite wide, its deductibles haven't changed (though its premiums have fallen over the past few years), and its enrollees are more insulated from transitory economic influences than the average working-age person with private sector insurance. And yet Medicare, too, hasn't been immune from the history-making: Per Capita Medicare Spending is Actually Falling.
Medicare spending isn’t just lower than experts predicted a few years ago. On a per-person basis, Medicare spending is actually falling.
If the pattern continues, as the Congressional Budget Office forecasts, it will be a rarity in the Medicare program’s history. Spending per Medicare patient has almost always grown more rapidly than the economy as a whole, often by a wide margin.
And this goes well beyond what the ACA needed to balance its books.
Pre-ACA, Medicare spending in 2014 was on track to be $710 billion.
Post-ACA (which required the program to slow growth and get more efficient), Medicare spending in 2014 was expected to be $652 billion.
In reality, Medicare spending last year was $600 billion. The slowdown is producing huge savings in Medicare, above and beyond what was statutorily required by the ACA.
In addition, the plans have a very narrow focus and the deductibles are significant. Many are foregoing care because they do not have the deductible, which may or may not be a good thing. One could say we are reducing unnecessary procedures or one could say people can't afford the care they need. Obamacare does not insure all the uninsured as was promised so we sort of have the same situation we had before obamacare. Green cannot argue that choice has not been severely restricted or that doctors en masse don't like obamacare. Can't see where those are positives. Plus the benefits seem to be a boon(or boondoggle depending how you see it) for the poor and just another cross to bear for the middle class, who will have to absorb the brunt of obamacare.
As far as I can tell, part of the "problem" is that most people have spent so long insulated from market dynamics in the health sector that they don't recognize it (nor like it) when it appears. Different networks have different costs associated with them. Opening up a real, functioning market means that insurers get to price different potential networks and offer different networks (at different price points) for your consideration. You as the consumer then get to choose one based on the mix of price and access to various providers that you want.
The exchanges have lots of broad network plans in them (generally, as a matter of economic fact, those will cost more), but they also have lots of narrower network options. The latter have proven popular because they tend to be less expensive--that is to say, in an open market people seem to generally value lower premiums over broader provider networks. That isn't restricting choice, that's giving people a choice. You don't have to choose a more expensive broad network plan, there are lower-cost options available if you want them. It seems many people do.
Yes, this is different than the norm in the employer space, where 1) employees generally don't get to make decisions, 2) employers err on the side of giving them more, and 3) the insurance costs more than the offerings people are flocking to in the exchanges (which, again, can be up to 20% cheaper for plans of equivalent benefits and generosity compared to employer-based plans). Turns out when they have to spend their own money--even if they're getting a subsidy to supplement--people in open markets are price conscious and show you what they really value. These market dynamics are absent in the employer-based world, where folks tend to be used to getting everything and (seemingly, other than in their lack of wage growth) not paying for it.
As for deductibles, those are what expose consumers to price when they interact with health care providers (up to now I've been talking about market dynamics in the insurance market). If you've got a $250 deductible and Provider A is offering a service for $1,200 while Provider B is offering that same service for $5,000 you have very little economic reason to choose one over the other, since you're effectively paying the same thing either way. You may even be drawn to Provider B's higher price for certain perverse reasons.
And Green I do not understand why posts like yours have no relation at all to my real world experiences. My premiums last year alone went up 20 percent. My wife's costs for blood pressure medicines have quadrupled. Many doctors won't take obamacare because they can't stay in business with its payments. So you are presenting a macro picture which leaves out the micro problems.
Are you in the open market? Did you shop around? Or are you in an employer-based plan (and, if so, is it fully insured or self-insured)?
Finally I love the diagnosis that says we really won't be able to evaluate its success or failure til many years down the road. So we have to destroy our healthcare system before we know we have destroyed our healthcare system. Please, call a shrink.
The health care system is about as far from "destroyed" as it can get. On most indicators, it's never done better than it's doing right now.
The experience of just about everybody I know plus the medical community I know simply doesn't support the hype promoted by those who are paid to or have vested interest in supporting the ACA.
