Oops, Long-Term Health Spending Crisis Not Averted After All


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 

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13 responses to “Oops, Long-Term Health Spending Crisis Not Averted After All”

  1. Peter Galuszka Avatar
    Peter Galuszka

    Gonna happen! Gonna happen! Gonna happen!

    well, not if you believe Paul Krugman who notes that the CBO says Obamacare will increase government costs overall by a whopping 3 percent!


    1. I thought Obamacare was supposed to *cut* government spending by billions of dollars — that’s how it was sold. Conceding that it will increase costs by 3% is quite an admission!

      1. One of the things that has not been made clear in the dialogue about ObamaCare is HOW it is funded.

        that would be a seriously good thing to do a blog post on IMHO.

        it would clear up some misconceptions about how it is funded.

        here’s a start:


  2. or you can look at Singapore – which has the lowest healthcare costs in the world and undeniably one of the more govt-directed healthcare systems in the world – from it’s mandatory 30% payroll taxes to required price disclosures for health care providers to price caps.

    The problem with American health care is

    1. – tax free employer-provided health care which promotes an “all-you-can-eat-for-one-price” mentality, i.e. everything is “covered”.

    2. – doctors are reimbursed by both private and public insurers (like Medicare) for how many diagnostic codes they can perform or order , not on whether they can necessarily make you better and so the country that orders the most MRIs, CT scans and other diagnostic procedures in the world by far, is the US.

    3. – We provide full coverage insurance to the most intensive users of health care – seniors for 100.00 a month even if they have a retirement income of 85K. We cover 80% and for a few dollars more – we’ll cover the other 20% with government-subsidized gap coverage (called Medicare Advantage).

    4. – people buy “crap coverage” catastrophic policies that don’t even cover catastrophic much less ER visits so these folks buy catastrophic coverage – go to the ER for care and their insurance does not pay.

    so the question is – how can Singapore provided the lowest cost healthcare in the world and have the lowest infant deaths and highest life expectancy and not be slipping into Boomergeddon – like we are?

    the very best free-market healthcare on the planet is found in 3rd world countries that has no employer-provided, no Medicare, no universal care, just pay for what you can afford … and … it sucks….the people in those countries are by far the worse off in the world – far, far worse than any conceivable “boomergeddon” world but yet – that’s what folks on the right advocate for..to head off ‘boomergeddon”.


    fixes? leadership? where?

    1. get rid of employer-provided tax benefits OR give EVERYONE the
    same tax benefits… one way or the other.

    2. – stop paying by diagnostic code

    3. – require people to have health insurance just like we do for auto insurance and every other OECD country on the planet including Singapore requires.

    4. – Make Medicare folks pay a fair price for their insurance especially if they are making 85K in income or better.

    5. – get rid of Medicare Advantage – re-instate the 20% co-pay.

    6. – build community centers for MedicAid and pay for doctors medical schools if they agree to serve 5 years in a MedicAid health center.

    7. require people who show up at an ER with crap insurance to sign a promissory note for the total cost of their care.

    8. vote out of office the right wing hypocrites.

    9. smile.

    1. DJRippert Avatar

      The highest personal tax rate in Singapore is 20%. Income earned outside of Singapore and not received in Singapore is not taxed at all. There are no capital gains taxes at all in Singapore.

      Singaporean employees must contribute 6.5% – 9.0% of their salary into a medical savings account. You WILL have the money available for substantial copays.

      Private (usually employer provided) health insurance constitutes about 30% of the health insurance in Singapore.

    2. DJRippert Avatar

      If the United States followed the Singaporean tax system the liberals would be crying great buckets of tears.

      The healtcare system in Singapore is perhaps the “least imperfect” in the world. However, you must look deeply and carefully to figure out how that health care system is funded and how it works. For example, Singapore’s unemployment for Q3 was 1.8% – a level generally believed to be impossible in western economies.

      1. we are not Singapore…no question about it.. but are we this bad right now with no options other than status quo?

    3. DJRippert Avatar

      Singapore also doesn’t spend a lot of money on unemployment benefits (thus allowing the government to spend more on healthcare).

      “Now back to Singapore… Singapore IS the third richest country in the world and unsurprisingly it has a very different attitude towards debt than us here in the U.S. and our friends in Europe. It begins with antipathy towards public welfare. Their attitude can be simply put: being poor is your own fault. Citizens are obliged to save for the future, rely on their families, and not expect any handouts from the government unless they hit rock bottom.

      The emphasis on family extends into old age: retired parents can sue children who fail to support them. In government circles “welfare” remains a dirty word. The government does run a handful of schemes directed at some of the needy, from low-income students to the unassisted elderly. But these benefits are rigorously means-tested and granted only sparingly. The most destitute citizens’ families may apply for public assistance; only 3,000 currently qualify of its population of about 4.5 million.

      Laid-off workers receive no automatic benefits. Instead they are sorted into “workfare” and training schemes.”.


      1. We import poverty by failing to have a sensible and enforceable immigration system. But the professional caring class is more important to our president and many others than ordinary workers. What would they do if we weren’t dedicated to keeping and expanding a class of dependent people?

        1. It would only be fair to point out here that the prior POTUS did nothing about it and the current GOP cannot agree among themselves to do something .

          blaming this on the POTUS is a cheap shot given the lack of action by Bush and the GOP.

          was Bush dedicated to ” keeping and expanding a class of dependent people?” and that’s why he did not act?

          is the current GOP dedicated to ” keeping and expanding a class of dependent people?” and that’s why they won’t act?

          what exactly can the current POTUS actually do if the GOP itself cannot even come up with something they agree on ?

          Some things the POTUS deserves blame for. this one is a cheap shot.

          1. I thought Bush did a very poor job on immigration issues. He didn’t want to rock the boat for business interests that wanted to undercut prevailing wages. Enforce the laws as is unless and until they are changed. His proposed immigration reform failed to address the concerns of many of us here legally. It was a second-rate piece of legislation.

            Obama goes further. He actively wants to sabotage the law and bring about a result that will increase dependency and expand work for the professional caring class.

          2. BS TMT. either you produce something or you make excuses.

            Bush made excuses and the GOP today makes excuses and yet Obama gets the blame because he’s the ONLY one who is actually proposing something.

            you cannot win when your party has no solutions and only blames others for theirs.

            that’s exactly why this country is in trouble now.

            we have people who oppose what Obama proposes but they have no alternative proposal.

            the failure to act while at the same time blaming is hypocrisy as well as bankrupt leadership.

  3. re: ” Medisave
    Under the Medisave program introduced in
    1984, employees contribute 6–8 percent of their
    monthly salary (with the share depending on
    their age) to an individual medical savings
    account (MSA), while employers make a matching
    contribution. Medisave contributions are
    part of a broader compulsory savings program
    in which employees contribute 16 percent of
    salaries, and employers 20 percent, to a central
    provident fund to cover hospitalization
    (Medisave), pensions, and mortgages.”


    the essential point is that the govt of Singapore REQUIRES you to save money towards your health care and retirement.

    and the facts are that Singapore spends just about the least amount of money on health care than any other country and 1/3 as much as we do while at the same time they have longer life expectancies than us and fewer infant deaths.

    All the countries that do health care cheaper than us, mandate taxes towards universal health care and all of them that do, spend less than we do and have equal and usually better life expectancies.

    we are in denial.

    we could kill ObamaCare and then do what? go back to the status quo?

    What leaders in this country have actually proposed real legislation to deal with the issue?

    blathering about the “free market” and “ideas” is not worth warm spit.

    someone has to lead… and each of the two parties have to support SOMETHING or just admit they are incapable of dealing with the issue.

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