National Health Spending Slowdown Underwhelms; Obamacare Hurting Middle Class | Health Policy Blog | NCPA.org

Dollar-under-magnifying-glass-1024x910While 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. The best performance was by private insurers, for whom spending growth dropped from 4.0 percent in 2012 to 2.8 percent in 2013. Medicare regulates health insurers’ medical loss ratio (MLR), which is the ratio of medical claims to total premium (actually, a more complex calculation than it appears). CMS’ actuaries credit this regulation with lowering the growth of private insurers’ spending.

via National Health Spending Slowdown Underwhelms; Obamacare Hurting Middle Class | Health Policy Blog | NCPA.org.

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