There has been much prattling of late that the cost increases for health care are slowing, that the long-term cost curve for Medicare and in the United States is bending downward and that Obamacare may even deserve some of the credit. Liberals everywhere are hopeful that health care expenditures somehow, miraculously, will not drive the nation into fiscal Armageddon and that no major entitlement reforms are necessary. Meanwhile, contrarians have attributed the slowdown in health care spending to economic weakness caused by the Great Recession and paltry recovery.
Now comes a paper written by Amitabh Chandra, Jonathan Holmes and Jonathan Skinner, “Is This Time Different? The Slowdown in Healthcare Spending,” that says both viewpoints are off the mark. State the authors:
We identify three primary causes of the slowdown: the rise in high-deductible insurance plans, state-level efforts to control Medicaid costs, and a general slowdown in the diffusion of new technology, particularly in the Medicare population.
Moreover, they believe the slowdown, like a similar abatement in healthcare spending in the early 1990s, is temporary. “Our best estimate over the next two decades is that health care costs will grow at GDP plus 1.2 percent; lower than previous estimates but still on track to cause serious fiscal pain for taxpayers and workers who bear the costs of higher premiums.”
Boomergeddon… running right on schedule.
— JAB
