Daniel Patrick Moynihan, former NY senator and UN ambassador, once said, “Everyone is entitled to his own opinion, but not to his own facts.” This came to mind immediately when I saw the results of a recent Kaiser Family Foundation poll on health reform. The poll, which has been tracking public opinion about the Affordable Care Act (a.k.a. Obamacare) for the past four years, found that support remained anemic at 47% overall favorable. As Moynihan said, everyone is entitled to his or her opinion. (Disclaimer: I was not originally a big fan of the ACA – I didn’t think it went far enough – but have come to think it’s better than nothing.) But two other statistics caught my eye. Half of all respondents believe that health care costs are now rising faster than usual since Obamacare was passed, and 48% think that Obamacare is the primary reason. That’s playing with the facts.
The reality is that healthcare costs have actually risen more slowly since 2009, a trend that has continued for four years. Moreover, we need to distinguish the different ways this is often expressed. First is overall healthcare spending. That has risen, an average of 3.7% annually since 2009, compared with an average of 6.1% for the four previous years. More importantly, for the first time in decades, health care spending grew slower than overall GDP in 2012. As a result, the proportion of all US spending that goes to health care decreased from 17.3% of GDP to 17.2%. Not exactly time to spike the football (the next highest country is still only around 11%). But it’s clearly the opposite of an increase.
Of course, overall spending is a factor of a number of things – population, price, and utilization. Some of the overall increase is a result of more people, so when we look at total spending per capita, the story is even more dramatic: a 1.9% annual increase since the ACA, compared with a prior average of 3.9% per year. And arguably, price is the thing that people are most concerned about – how much is the same service going to cost me? Medical price inflation was only 1.7% in 2012; after decades where health care price increases outpaced general inflation, it is now essentially the same. And when parsing how much each of the factors contributes to the overall increase in healthcare spending, price increases now account for 50% of the increase, in contrast to the 80% proportion in earlier years.
There is a good deal of debate about why health care spending increases have slowed. Among the factors postulated include: the generally bad economy (though the decreases have persisted despite 3 years of solid albeit suboptimal economic growth); the shift to high-deductible health plans (i.e., more consumerism), a trend driven in part by the so-called “Cadillac health plan tax” in the ACA; and some provisions of Obamacare such as accountable care organizations, Medicare payment changes, and penalties for hospital readmissions. The consensus seems to be that the ACA itself has probably played a minor but real role.
So let’s have a debate about why spending has slowed down. Feel free to opine about whether Obamacare is good policy, whether it will do what it set out to do, whether the roll out could have been handled better, or even whether you like the name. Those are all fair game, and I myself have mixed feelings about all of these. But regardless of the degree to which you credit Obamacare for the decrease in spending growth, you cannot blame it for the faster spending increase, which didn’t actually happen. That’s just making stuff up.