Tuesday, January 10, 2012

More on Yesterday’s Report on Health Spending

As we pointed out yesterday, the Medicare actuaries reported that health spending rose by 3.9% in 2010, to a whopping $2.6 trillion, or $8,402 per person.  Other interesting facts related to the report, which can be found here on the Health Affairs website (subscription required):

  • As we noted, the ongoing recession was the prime reason for the slowdown in spending growth.  The actuaries found that growth in use and intensity of services was virtually flat in 2010, compared to an average 3.3 percent growth from 2000-06.  This change reflects the fact that individuals are forgoing care due to financial concerns in the recession.
  • The actuaries concluded that “the projected net effect of [Obamacare’s] provisions on health spending in 2010 was approximately 0.2 percentage point.”  This conclusion is consistent with the actuary’s prior assertion that the law will raise overall health spending by $310,800,000,000 in its first decade alone.  It is NOT consistent with candidate Obama’s repeated promises to CUT premiums by an average of $2,500 per family by the end of his first term.
  • The White House blog post on the report claimed that “the important Patient’s Bill of Rights protections” in Obamacare “did not have a measurable effect on health spending.”  That raises an obvious question:  If the supposed benefits had no measurable effect on spending, how important could they possibly be…?
  • Government spending as a share of overall health expenditures rose from 41% in 2007 to 45% in 2010.  Likewise, the federal share of overall health spending “increased substantially in the past three years – rising to 29% in 2010, up from 23% in 2007.”  In dollar terms, federal spending on health care grew by a whopping 40% in the past four years alone – from $530 billion in 2007 to $743 billion in 2010.  That spike in federal spending came BEFORE the major provisions of Obamacare take effect, making it a harbinger of things to come.
  • The report noted that 2010 “was the first year of single-digit growth in Medicare Advantage enrollment since 2005.”  This trend is a mere precursor to the effects Obamacare will wreak on Medicare Advantage plans; one report concluded that Obamacare by 2017 will cut Medicare Advantage enrollment in half, and cut plan choices by two-thirds.

Overall, the report concludes that health spending continues to rise, though at unusually low levels, and this latter trend was due largely to the ongoing economic recession.  In short, it demonstrates why both the “stimulus” AND Obamacare have failed to accomplish their intended goals – the former to return the country to work, and the latter to cut premiums in absolute terms, as candidate Obama promised.