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Health Spending Down—Because People Are Avoiding Care

Posted By Alyene Senger On January 11, 2012 @ 12:45 pm In Obamacare | Comments Disabled

The Office of the Actuary at the Centers for Medicare and Medicaid Services (CMS) recently published its annual estimate of U.S. health spending in the journal Health Affairs [1]. The report shows that growth in health spending remained slow in 2010. Medical expenditures grew at an annual rate of 3.9 percent, up just 0.1 percent from 2009. However, the slow growth doesn’t represent a decrease in health care costs, but a reduction in utilization and intensity of medicine. People are choosing the less costly alternative of avoiding the doctor and not taking expensive prescription drugs.

The report primarily attributes the slow growth to effects of the recent recession:

Including the highest unemployment rate in twenty-seven years, a substantial loss of private health insurance coverage, employers’ increased caution about hiring and investing during the recovery, and the lowest median inflation adjusted household income since 1996.

Despite CMS’s and other health economists’ conclusion that the recession led to slow health spending growth, the Obama Administration published a blog [2] stating that Obamacare is responsible, with no mention of the recession. Nancy-Ann DeParle, Assistant to the President and Deputy Chief of Staff, wrote that “(These numbers) do show why the Affordable Care Act is so important. And we’re confident the law will continue to help hold down cost growth in the years ahead.”

But with only a few provisions of Obamacare enacted, CMS found its effects to be minimal, with a projected net impact on health spending of less than 0.1 percentage point.

Quoted by The Wall Street Journal [3], Douglas Holtz-Eakin said it best: The Obama Administration “really can’t claim any credit unless it’s to say, ‘We broke the economy and you can thank us for that.’ ”

However, one portion of health spending has substantially grown, and that’s the federal government’s share of the spending. According to the CMS report, the government’s percentage of spending has risen to 29 percent, an increase from 23 percent in 2007. The report explains [1] that the increase is due to “Medicaid enrollment increasing rapidly and the federal government paying a higher share of Medicaid benefits through enhanced federal matching rates, as mandated by the Recovery Act.”

As the federal government spends more money on health care, it gains more power in our health care system. Government control places a bigger tax burden on the American people while reducing taxpayers’ freedom to choose their own health care. Government control and the weight on taxpayers are only expected to rise further with the most costly provisions of Obamacare, such as Medicaid expansion and exchange subsidies, taking effect in 2014.

To avoid Obamacare’s inevitable increase of government control over health care and the increased burden it puts on taxpayers, it must be repealed. For ideas about health care reform that works, read Heritage’s Saving the American Dream [4].


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URL to article: http://blog.heritage.org/2012/01/11/health-spending-down%e2%80%94because-people-are-avoiding-care/

URLs in this post:

[1] Health Affairs: http://content.healthaffairs.org/content/31/1/208.full.pdf

[2] Obama Administration published a blog: http://www.whitehouse.gov/blog/2012/01/09/lowering-health-care-cost-growth-get-more-value-consumers

[3] Wall Street Journal: http://online.wsj.com/article/SB10001424052970203436904577151033764613376.html?mod=rss_whats_news_us&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+wsj%2Fxml%2Frss%2F3_7011+%28WSJ.com%3A+What%27s+News+US%29

[4] Saving the American Dream: http://www.heritage.org/research/reports/2011/05/saving-the-american-dream-the-heritage-plan-to-fix-the-debt-cut-spending-and-restore-prosperity

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