Report: That recent deceleration in healthcare spending? Yeah, that’s probably over

posted at 4:41 pm on April 16, 2014 by Erika Johnsen

For about a decade, the rate at which healthcare costs inflate has been slowing down markedly, with an especial plateau in the last several years (from 2009 to 2012, the rate stayed at just under 4 percent) — a slowdown for which ObamaCare’s supporters have almost bizarrely been heard taking credit. The general downward trend in price growth is attributable to various advances in the healthcare system over the years, and the recent plateau is almost certainly due to the economic recession that had a lot of people declining/deferring healthcare services they might otherwise consume if their belts weren’t so tight. That’s exactly why I find it so weird that any advocate for the president’s crowning legislative achievement would try to assign the law the credit for the slowdown: It makes it much harder for them to dissociate any future price acceleration from the law, and since ObamaCare directly incentivizes a whole lotta’ people to consume healthcare services they wouldn’t otherwise, that’s going to be a particularly tough task.

A new report is suggesting that healthcare spending rates started to tick back upward again in 2013, probably thanks to a somewhat less sluggish economy, and that the return to the fast-growing pricing trend may be just around the corner. Via the LA Times:

A historic slowdown in U.S. healthcare spending in recent years may be drawing to a close.

An industry report published Tuesday and healthcare experts point to a steady rise in medical care being sought by consumers seeing specialists, getting more prescriptions filled and visiting the hospital. Other factors such as millions of newly insured Americans seeking treatment for the first time and higher prices from healthcare consolidation could also help drive up costs.

Experts aren’t predicting an immediate return to double-digit increases in medical spending. But the emerging trend underscores how difficult it will be for policymakers, employers and health plans to control healthcare costs going forward. …

David Gruber, director of healthcare research at Alvarez & Marsal, said he’s expecting a similar trend of higher demand coupled with consolidation among hospitals and large physician groups pushing up prices. He said the demand for services is being driven by an influx of Obamacare enrollees, aging baby boomers and people with chronic conditions who can no longer delay care.

“At some point you can’t defer anymore,” Gruber said. Health spending “isn’t going up by double digits, but it could spike to 6% or 7%.”

There are going to be so many factors a play here in the next few years that it’ll be difficult to sort out exactly what is causing what, but it’s worth noting that the pricing slowdown the Obama administration has been using as a PR tactic is likely to get obliterated largely by their own program as the demand increases and puts more strain on the system — and, hence, that the government-mandated expansion of health insurance is not necessarily going to equate with increased access or quality care for more people.


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No that people need to pay huge deductibles, total healthcare spending PER PERSON should decrease the problem is that insurance companies’ costs are going to increase because of pre-existing conditions.

and the required minimum, mandated coverages…one size fits all does NOT fit the budget….

hillsoftx on April 16, 2014 at 4:53 PM

The Republicans better organize an outside Expert Commission right now, one who can credibly define and publicize this problem right now. Once the midterms happen and the costs then start to rise, the cost-apocolypse will become entirely the “fault of the Republican Party”.

Announce the Commission today, to study the coming cost increases and work on ways to avoid them. Put Romney in charge if you have to (to get the establishment to buy in); the guy screwed up Massachusetts and the election so maybe this “consulting” gig could be his chance to make amends.

Appoint provisional “Special Prosecutors” to begin to investigate the rent-seeking corruption of the Democrats and the far-reaching attempts to end political opposition through law fare and agency abuse.

Get it out there GOP, aggressively. Or you’ll eat it.

MTF on April 16, 2014 at 4:59 PM

The general downward trend in price growth is attributable to various advances in the healthcare system over the years,

That is so hard to read. Let me rephrase and put it in fly-over country terms:

“Honey, we’re still going bankrupt, just not as fast now”

BobMbx on April 16, 2014 at 5:02 PM

the government-mandated expansion of health insurance is not necessarily going to equate with increased access or quality care for more people

…no problem!…the politburo press…won’t report it!

KOOLAID2 on April 16, 2014 at 5:02 PM

Nothing but good news all around from the Obama administration… I mean, what could go wrong at this point?

oscarwilde on April 16, 2014 at 5:04 PM

Other factors such as millions of newly insured Americans seeking treatment for the first time

This one needs re-writing too:

Other factors such as millions of newly insured Americans getting healthcare that they don’t have to pay for. Just like before the ACA. The difference is this time they have a subsidized insurance card so they don’t have to feel like they’re stealing from everyone who actually pays full price for the same card.

BobMbx on April 16, 2014 at 5:06 PM

Hmmmm….

Eat, or go to the doctor?

Pay rent, or go to doctor?

Buy gas to get to work(conservative), or go to the doctor?

Put clothes on my kids back, or go to the doctor?

Welcome to reality for those of us rubes too stubborn to get SNAP, Welfare, etc.

I wonder why health care spending has been slow the last few years? Sheesh!

captnjoe on April 16, 2014 at 5:11 PM

“It makes it much harder for them to dissociate any future price acceleration from the law…”

No it doesn’t, and this is why the right has been relatively ineffective in defeating the left’s agenda. Conservatives are still failing to understand the diseased liberal mind. Libs will continue to cherry-pick the credit and brush away anything negative that results from their policies.

Who will hold them accountable, the media?

8thAirForce on April 16, 2014 at 5:22 PM

captnjoe on April 16, 2014 at 5:11 PM

Exactly and it is just getting worse…Food/Gas up considerably just since January.

CoffeeLover on April 16, 2014 at 5:26 PM

I am a healthcare analyst in MA – I had to do the analysis on RomneyCare after the initial roll out. The conventional wisdom was that the newly insured would drive up costs in the short term – due to the fact they were getting treatment for issues they might have delayed or newly identified because they were getting an exam for the first time in years, if ever. Once the “pent up” demand equalized, healthcare cost increases would level off.

The bottom line is this never happened – and MA has some of the highest health care costs in the nation due at least in part to RomneyCare. Demand did not level off, quite frankly because many of the people were being subsidized and it was not their dime. And those that did pay out of pocket bought insurance because they had chronic illnesses and/or could buy it for the first day of the month anytime of the year, at least initially (eg find out you have a tumor on the 19th, buy insurance on the 20th and be in surgery on the following 1st). What this meant is only high demand users bought the product and healthy individuals just paid the fine (which was way cheaper at less than $1000/yr vs $400/month for average individual).

Expect to see the O-bots say the bump in demand is only temporary and expect to see it perpetuate just as it did in MA. It happened before and it will happen again.

paa853 on April 16, 2014 at 5:39 PM

An industry report published Tuesday and healthcare experts point to a steady rise in medical care being sought by consumers seeing specialists, getting more prescriptions filled and visiting the hospital. Other factors such as millions of newly insured Americans seeking treatment for the first time and higher prices from healthcare consolidation could also help drive up costs.

“Millions”? Plural? The LA Times has word there are now two million Americans newly insured and seeking treatment for the first time?

Lolo on April 16, 2014 at 5:43 PM

paa853 on April 16, 2014 at 5:39 PM

Thank you. I learn as much from HA posters as I do from the bloggers.

Lolo on April 16, 2014 at 5:48 PM

captnjoe on April 16, 2014 at 5:11 PM

Obama to Joe: “Thats called prioritization. You get a Choco bonus this month”

BobMbx on April 16, 2014 at 5:52 PM

Expect to see the O-bots say the bump in demand is only temporary and expect to see it perpetuate just as it did in MA. It happened before and it will happen again.

paa853 on April 16, 2014 at 5:39 PM

With these guys, they’ll turn it into a “good” thing. They’re geniuses at spinning straw into gold.

MTF on April 16, 2014 at 6:25 PM

No worries. King Barack will just cook the books and get the numbers he wants.

GarandFan on April 16, 2014 at 7:30 PM

I am a healthcare analyst in MA – I had to do the analysis on RomneyCare after the initial roll out. The conventional wisdom was that the newly insured would drive up costs in the short term – due to the fact they were getting treatment for issues they might have delayed or newly identified because they were getting an exam for the first time in years, if ever. Once the “pent up” demand equalized, healthcare cost increases would level off.

The bottom line is this never happened – and MA has some of the highest health care costs in the nation due at least in part to RomneyCare. Demand did not level off, quite frankly because many of the people were being subsidized and it was not their dime. And those that did pay out of pocket bought insurance because they had chronic illnesses and/or could buy it for the first day of the month anytime of the year, at least initially (eg find out you have a tumor on the 19th, buy insurance on the 20th and be in surgery on the following 1st). What this meant is only high demand users bought the product and healthy individuals just paid the fine (which was way cheaper at less than $1000/yr vs $400/month for average individual).

Expect to see the O-bots say the bump in demand is only temporary and expect to see it perpetuate just as it did in MA. It happened before and it will happen again.

paa853 on April 16, 2014 at 5:39 PM

I think part of the difference from predicted behavior is that there isn’t a huge problem with lack of access to healthcare in the US. My impression as a doctor is that there is a very small percentage of people who don’t have access to care that want it.

The large number of uninsured patients cited by Obama in support of the ACA includes mostly people that are low consumers of health care. They don’t have health inusrance because they don’t feel they need it, and mostly they are correct. The odds of a healthy 30 year old male having a significant, expensive health issue in any given year are less than one percent. If the vast majority of the population that had no insurance before “universal” coverage has no/low health expenses, the overal expenses will change very little when they get coverage.

This doesn’t mean no one could benefit from better access to insurance, and some of their stories could be dramatic. My impression is that the percent of these patients is very small.

talkingpoints on April 17, 2014 at 5:54 AM