August 9 2013
Patrice J. Lee
In a thoughtful op-ed this week noted Washington Post columnist Robert Samuelson challenges the Obama Administration’s assumption that the recent drop in health spending is due to the Affordable Care Act (a.k.a ObamaCare). Samuelson notes that the major pieces of the legislation have yet to be implemented. So it’s premature for the White House and ObamaCare supporters to celebrate.
To be clear, spending on healthcare has not declined but the rate at which it rises is not as fast as in the past. In Washingtonspeak, slower growth of out-of-control spending is the same as a reduction in spending. According to a White House blog post, health care goods and services rose just 1.1 percent over the year and that’s “the slowest rate of increase in nearly 50 years.” They take that as their mandate to plough ahead with this massive healthcare industry takeover.
But correlation and causation are not the same thing. For example, just because I see a bus pass by a 7-Eleven and at the same time the 7-Eleven manager walks out eating a stale churro, it doesn’t mean that the bus caused the manager to walk out with the stale pastry.
“The blog post is something of a sleight of hand. It simply says that the spending slowdown and the ACA’s implementation have coincided. There’s no explicit language linking the two, though unsuspecting readers would surely take away that message. The post is both politically self-serving and intellectually defensible.”
Others agree that there is a missing link.
A study by the Organisation for Economic Co-operation and Development (OECD ) finds a global slowdown in health spending as the growth in health spending has collapsed in most OECD nations. This is especially true in European countries such as Greece, which facing severe economic crises, have been forced to cut health spending. And here in the U.S.A., our recession during the past several years played a contributing factor to the slowed growth in healthcare spending. After all, how many companies let workers go nixing their health insurance coverage and how many unemployed patients skipped visits to the doctor?
Other economists point to structural changes in the healthcare industry at work even before President Obama took office. Cheaper generic drugs are more available, healthcare providers are getting better at lower administrative costs and patients are shouldering greater cost burdens in higher deductibles and co-payments.
Samuelson ends questioning whether the slowdown will be short-lived and points to interesting variables such as an improving economy and free healthcare.
The variable that sticks out to me is the aging Baby Boomer population. Over the next decade, the parents of Generation X and Millennials will begin showing up to the doctor with more numerous and more expensive ailments from tennis elbow to cancer.
If Baby Boomers scoop up ObamaCare's free healthcare coverage like mints at the entrance of an Italian restaurant, it doesn’t take a Harvard PhD to surmise that the slowing healthcare spending trend will likely take a sharp turn in the other direction.