Department of Uh-Oh

by on April 16, 2014 at 12:31 am in Data Source, Economics, Medicine | Permalink

A four-year slowdown in health spending growth could be coming to an end.

Americans used more medical care in 2013 as the economy recovered, new reports show. Federal data suggests that health care spending is now growing just as quickly as it was prior to the recession.

“We’re at the highest level of growth since the slowdown began,” Paul Hughes-Cromwick, a senior health economist at the Altarum Institute, which tracks health spending. “You have to go back seven years to see growth like this.”

There is more here, from Sarah Kliff.  Note that is only from one quarter, however.  Kevin Drum remains more sanguine.

prior_approval April 16, 2014 at 2:25 am

‘Americans used more medical care in 2013 as the economy recovered’

This statement – ‘Americans used more medical care in 2013 as it became possible for them to’ would seem to be the very point of expanding health care coverage.

But that would lead back to something that apparently is tiresome to read, in measuring ACA’s success through actually making health care more available to those taking advantage of the intent of the act.

I’m curious – why not take a poll of under-26 year students before or after class, asking what they think about having health care coverage through a provision of the ACA?

It could even be seen as research.

Maurice de Sully April 16, 2014 at 3:12 am

Why not ask a set of 22 year olds who aren’t likely to be on thier Daddie’s dime and see what answers you get with respect to that question?

More importantly, while increasing “access” would generally lead to increased costs- as you note- the President, and those who regurgitate whatever he says, claimed just the opposite would happen. So this happening is something of a problem.

Jan April 16, 2014 at 6:30 am

People can stay on their parents’ insurance until they are 26 now. That was part of the ACA.

The dialogue was around reducing spending compared to the _projections_ of growth. For the record, I don’t think you can actually decrease total spending while covering more people.

mulp April 17, 2014 at 12:24 am

You presume their parents have employer health insurance…..

Jan April 17, 2014 at 6:47 am

Yeah, most of them do. Obviously some don’t.

ThomasH April 16, 2014 at 7:25 am

Whether the rhetoric of proponents or opponents of ACA is closer to the truth is a mildly interesting issue (I think the proponents still win), but the important issue is how to continue reforming incentives for health care use so as to make it more efficient, using more of the more effective technologies and less of ineffective ones.

mulp April 17, 2014 at 12:27 am

Why not debate how to make EMTALA more efficient and more profitable?

Or is anything Reagan signed into law not subject to debate of its effectiveness and viability even when Republicans invoked EMTALA to counter the argument that people are denied health care because they lack money or health insurance.

dan1111 April 16, 2014 at 3:19 am

1) Given that early 20′s adults use very little health services, it seems exceedingly unlikely that this is driving an increase in medical spending. Of course, if there is any evidence to back up your statements, please present it, as it would be quite interesting to all.

2) Medical costs going up are now proof of ACA success? My, how the goalposts have moved!

Assa April 16, 2014 at 2:31 am

Obamacare Medicaid expansion for everyone below 133% of poverty line FTW.

dan1111 April 16, 2014 at 3:20 am

Note: in 2013 this hadn’t started yet.

Jan April 16, 2014 at 6:16 am

And about 25 states aren’t even expanding.

Z April 16, 2014 at 11:09 am

That’s why Obama thinks 32 states have expanded Medicaid. ;-)

Jan April 16, 2014 at 3:01 pm

Whatchu talking about, Z? Would you say 27 states is about 25?

Craig April 16, 2014 at 3:11 am

Ah yes, when I have increased access to health care, that is a good thing and a sign of living in a modern society instead of living in some third world hell hole. When *you* have increased access to health care, then Uh-Oh.

dan1111 April 16, 2014 at 3:32 am

It is a fallacy to equate “rising costs” with “increased access to health care”. Healthcare costs have risen dramatically in America in recent years, and not because of increased access. Why are things different now? Most of Obamacare had not taken effect in 2013, so that is unlikely to be the explanation.

GiT April 16, 2014 at 4:44 am

It’s also a fallacy to equate rising (total) expenditures with rising (per capita, per procedure, or whatever) costs, but here we are.

dan1111 April 16, 2014 at 5:04 am

I meant “costs” as in total costs, the same thing as expenditures–not costs as in prices. Sorry if that was unclear.

GiT April 16, 2014 at 12:25 pm

And when Obama or whoever talks about lowering healthcare costs, is he talking about lowering costs for individuals or the portion of the national income spent on healthcare?

Jan April 16, 2014 at 6:25 am

Just a couple clarifications. Health costs actually haven’t risen dramatically in recent years — that’s why this new data is something to pay attention to.

Also a large share of the Obamacare had taken effect by 2013. For example, a lot states had expanded their Medicaid programs by then and mandatory coverage of preventative care had been required across all insurers. So I think it is tough to say this is or is not solely because of the ACA.

dan1111 April 16, 2014 at 8:59 am

I didn’t know that some states had already expanded Medicaid. 2014 was the deadline for that. I consider the mandatory preventive care coverage small potatoes, though I could be wrong.

It is possible that these changes have driven the increased expenditures. However, evidence for that is needed. It can’t just be assumed, particularly because there was an existing trend of increasing health expenditures.

mulp April 17, 2014 at 12:48 am

Given US health care costs have a three decade history of rising faster than all other costs in the US and rising at about twice the rate of the other OECD nations participating in the health care statistics, rising health care costs need to be assumed to be unrelated to Obamacare until solid evidence demonstrates Obamacare is directly the cost.

My individual health insurance premiums for the identical policy on which I made no claims that came close to the $5000 deductible increased by 8-10% in July of 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, but fell 10% in 2011 when the MLR rule kicked in, then increased in 2012.

Were all those increases prior to 2011 due to Obamacare? If no, then why was the increase in 2012 due to Obamacare?

Jan April 16, 2014 at 3:02 pm

I agree, we shouldn’t assume that.

Z April 16, 2014 at 11:11 am

Fallacy is not the right word.

In the religion of the Left, an important bit of mythology is that evil insurance companies were preventing the people from dipping their cup into the magic fountain of health care. Now that the brave Obama has slain the monster, people are rushing to drink from the fountain!

The right word is fantasy.

ThomasH April 16, 2014 at 10:50 pm

Not exactly. The Heritage Foundation- liberal analysis of the problem of the individual insurance market was that adverse selection required selection to prevent it which limited access. This was corrected with the mandate plus subsidies. Insurance companies remained just profit making firms, neither evil nor good.

Boonton April 16, 2014 at 1:52 pm

2.7% and 3.8%. The first is the increase in the # of doctors visits per person in 2013 and the second is the # of scripts filled by pharmacies.

Part of that might simply be catch up to changing demographics. While the recession caused some people to cut back, time won’t stand still just because GDP will, as we get older we start visiting the doctor more and taking more pills.

Jon April 16, 2014 at 5:54 am

Total costs is not a problem; prices are. What would be the point in providing people with insurance if they don’t use it to access the healthcare system to improve their health? If people don’t consume more healthcare because of the ACA, it means the ACA is not working. One hopes that they consume the less expensive forms of healthcare and reduce consumption of the most expensive forms that are needed when they become more seriously ill.

dan1111 April 16, 2014 at 9:02 am

It’s possible that people could consume the same amount of healthcare or even less, but do so more efficiently. This would probably be the best outcome, given that everyone agrees there is a lot of waste in the American system. Not that I think that the ACA will achieve this, but to some extent that is what was promised. The way of measuring the results needs to take that into account.

mulp April 17, 2014 at 12:59 am

If they go the ER with insurance instead if simply depending on EMTALA and not paying the bills and ignoring the collection agencies, is that more efficient and less costly?

dan1111 April 17, 2014 at 11:42 am

In each case, the same amount of healthcare is consumed; it is just being paid for in a different way. So it doesn’t really speak to the point.

Andrew' April 16, 2014 at 3:50 pm


Jon April 16, 2014 at 5:55 am

Another way to put it. You would not hope that a program to reduce world hunger would not increase food consumption. Ditto for health care services.

Michael April 16, 2014 at 9:35 am

Just in case you haven’t been following along, let me catch you up. Over the past two years, as the rate of growth of spending has been drifting downwards, we’ve been treated to triumphant articles from Ezra Klien, Ms Kliff and others declaring that the new healthcare law is succeeding in lowering costs. So, now that the trend has been interrupted, we’re supposed the believe that the new law is succeeding because we’re spending more?

Remember, this law was sold with a laundry list of unattainable promises. That way, when most of them inevitably fail, partisans can point to the one aspect that “succeeded” and declare victory.

Andrew' April 16, 2014 at 10:32 am

One what?

Jon April 16, 2014 at 10:43 am

Thanks for catching me up; but the law is a mixture of parts that are intended to reduce costs and ones to enable people who could not access care obtain it. For the former there are incentives for hospitals to reduce admissions, antifraud provisions, and usage of accountable care organizations. Some of that has already started.

Towards the latter, more people are insured or have more comprehensive insurance. This will increase utilization

Michael April 16, 2014 at 3:07 pm

You’re quite right, the law is chock-full of countervailing features, some of them may actually even be pretty good policies. Further, it is not clear whether increasing or decreasing amounts of total spending is good in and of itself– there’s just too many factors that go into it.

I just get sick and tired of the reports from self-described “wonks”, like those at Vox, whose self-conception is that they offer unbiased, erudite and sophisticated analysis, when they are just partisan hacks.

Boonton April 17, 2014 at 7:57 am

Looking at the graph on Drum’s page it’s pretty hard to see any variation from medical costs continue to decline relative to their previous growth.

Rich Berger April 16, 2014 at 7:55 am

Nah. This was just a rush to get things done before the inevitable decline in the American health care system.

spencer April 16, 2014 at 10:38 am

The PPI for drugs apparently bottomed late last year.

But the CPI for healthcare services -hospital and doctors — is still slowing.

a Michael April 16, 2014 at 10:40 am

So health care is somewhat of a consumption good. If people like spending more money on it, let them. The only reason this is an issue is that we have decided that taxpayers should subsidize that consumption, and do so in extremely distortionary ways.

But I reject the premise that more health care spending, in and of itself, is a bad thing. As a society becomes wealthier, it would make sense that people would spend more income on things that make them feel better/safer/healthier even if the extra spending doesn’t affect real health outcomes.

Michael April 16, 2014 at 11:43 am

Spend growth isn’t price growth–I love how Tyler tries to muddy the waters on this. It’s breathtaking how GMU cares not one whit about data.

Andrew' April 16, 2014 at 3:54 pm

One of the marketing points was to reduce total spending with the implication that effectiveness would be improved. I’m not sure how that was supposed to be accomplished unless the “uninsured” were missing out on wonderfully effective treatments.

I REALLY don’t see exactly how ACA is supposed to reduce specific individual procedure prices if that is what you are saying. What are you saying?

Michael April 16, 2014 at 5:27 pm

I’m saying a shitload of people weren’t getting medical care because they lacked insurance, and now they can. Of course that drives total spending up. The point of the ACA wasn’t to reduce consumption of medical care, which would be reflected in lower spending. The point was to lower the cost growth of health insurance.

Bill Kilgore April 16, 2014 at 6:34 pm

– The point of the ACA wasn’t to reduce consumption of medical care, which would be reflected in lower spending. –

That may not have been your point, but the supporters of the law argued that the former would occur. Pretending such didn’t happen, or simply choosing to excuse rank dishonesty (or cluelessness if you prefer) in the context of health care policy, may be really attractive to people who think the President’s taint is a reasonable substitute for a breath mint. For those of us who place a higher priority on oral hygiene, the calculus is somewhat different.

Again, it’s fine to argue that spending more in total on heath care is a good thing. But if one argued the converse would happen- and are now insisting we ignore the earlier claims and celebrate this new “achievement”- I think the better question is, how would anyone who finished the third grade take these people seriously?

Michael April 16, 2014 at 6:47 pm

“the supporters of the law argued that the former would occur.”

Can you provide a single instance of supporters of Obamacare saying it would lead to people receiving less medical care?

I think you are confusing spending on health insurance and spending on health care. Obamacare was supposed to cause less spending on health insurance and more spending on health care. Tyler and other paid mouthpieces have successfully confused the moderately intelligent to miss this important distinction.

pritesh April 16, 2014 at 11:58 am

When it comes to the ACA, Tyler is becoming a troll.

Andrew' April 16, 2014 at 1:53 pm

Let’s say we had a DEEP recession that brought our GDP per capita to the level of…Germany. What would our medical spending look like?

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