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http://www.forbes.com/sites/rickungar/2013/02/12/new-data-suggests-obamacare-is-actually-bending-the-healthcare-cost-curve/

New Data Suggests Obamacare Is Actually Bending The Healthcare Cost Curve


Barack Obama signing the Patient Protection and Affordable Care Act at the White House (Photo credit: Wikipedia)

A new Congressional Budget Office report out last week has the healthcare world scratching its head over the possibility that Obamacare might—in part—be responsible for what is being described as a significant slowdown in the growth of healthcare costs in America.

According to the report, hundreds of billions of dollars in federal spending for Medicare and Medicaid are being removed from government projections as federal healthcare spending is now expected to be full 15 percent less than what had been initially budgeted for 2012. The surprisingly low spending projections come as the growth in healthcare spending has hit a new low for the fourth consecutive year.

To be sure, a big part of the decline in healthcare spending is the result of the recession’s impact on people’s ability to lay out cash on health related expenditures. Indeed, up until this point, most analysts have agreed that the poor economy was pretty much the sole cause for the improvement we have seen in containing the explosion of healthcare spending.

Now, experts are beginning to recognize that the Affordable Care Act may, in fact, be contributing to the good news—a significant development as bending the cost curve was a primary goal of Obamacare.

Douglas Elmendorf, Director of the CBO, noted that while much of the savings are the result of a loss of wealth due to the recession. But, for the first time, Elmendorf was willing to say that a ‘significant part’ of the savings are the result of structural change in how healthcare is now being delivered.

While the new data suggests that some of the changes in how providers are paid for delivering healthcare began—and were having a positive impact—prior to passage of Obamacare, the ACA codifies these changes in payment procedures for physicians and hospitals, taking what now appears to be programs that are slowing the growth in costs and applying them to all providers throughout the nation.

Importantly, the slowdown in the cost of care is happening in both the overall rate of spending and government spending. Writes Annie Lowrey in the New York Times—

“The slowdown has occurred in both government and overall health spending. From 2009 to 2011, total health spending grew at the lowest annual pace since the government started keeping records 52 years ago, a trend that seems to have continued last year. In the 2012 fiscal year, Medicare spending per beneficiary grew just 0.4 percent. The new Congressional Budget Office data said that overall Medicare outlays grew 3 percent in 2012, the slowest rate since 2000.”

The multi-billion dollar question is whether this positive trend will continue as we have seen slowdowns in the past only to see the curve explode upwards after a pause.

The answer to that question matters as Lowrey reports—

“Slower cost growth would have ramifications far beyond the deficit. According to calculations by White House economists, slowing the annual growth rate of health care costs by 1.5 percentage points might increase economic output by 2 percent in 2020 and 8 percent in 2030. It might also lead to higher wages for workers and more room for productive investments in the budget.”

While we can expect the Obamacare bashers to pour cold water on this good news, there is no denying that the law is paying some dividends in the critically important effort to bend the cost curve in healthcare delivery.

Could this be enough to open people up to contemplating that there may just be other good news to come thanks to health care reform?

contact Rick at thepolicypage@gmail.com and follow me on Twitter and Facebook

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Eric D. Schwerin
eschwerin@rosemontseneca.com

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