This report got a lot of attention by opponents of the PPACA and in the media. Increasingly, I believe “opponents of the health care law” and “the media” are not actually two separate groups, but in any event this portion of the projection got a lot of attention:
Well, last week the Office of the Actuary in the Centers for Medicare and Medicaid Services published the latest projections of health spending in the journal Health Affairs. Attention focused mainly on the Actuary’s estimate that national health spending would grow to almost 20% of GDP by 2020 and that the Affordable Care Act (ACA) would have a negligible impact on the rate of growth in health spending.
Rate of growth.
But, this is also true, and it’s in the same report:
The Actuary said that the ACA will largely pay for itself, producing savings in health care spending that will offset the additional costs as the uninsured gain coverage, have better access to care, and have lower out-of-pocket costs.
And now there’s this, which got no (national) attention at all:
While our elected representatives wrangle over slicing entitlements, virtually no one seems to be paying attention to an eye-popping fact:Medicare reimbursements are no longer accelerating at a break neck-pace. The new numbers should be factored into any discussion about healthcare spending: From 2000 through 2009, Medicare’s outlays climbed by an average of 9.7 percent a year. By contrast, since the beginning of 2010, Medicare spending has been rising by less than 4 percent a year. On this, both Standard Poor’s Index Committee and the Congressional Budget Office (CBO) agree. (S&P tracks healthcare spending with the help of Milliman Inc., an independent actuarial and consulting firm.) What explains the 18-month slow-down? No one is entirely certain. But at the end of July David Blitzer, the chairman of Standard &Poor’s Index Committee, told me: “I’m hesitant to say that this is a clear long-term trend. But it’s more than a blip on the screen.”
In the S&P report on healthcare spending released on July 21, he wrote: “many participants [in the healthcare system] have indicated that providers are trying to address health care reform and are looking for ways to control costs. If true, this combination certainly would be a contributory factor to the moderation in cost we have witnessed since early 2010.”
And here’s a name from the past to explain it all:
Zeke Emanuel, an oncologist and former special adviser for health policy to White House Office of Management and Budget director Peter Orszag, is certain that this is what is happening. When I spoke to him last week, Emanuel, said: “This is not mere chance: this is directly related to the initiation of health care reform.” It is not the result of reform, Emmanuel emphasized. The reform measures that will rein in Medicare inflation have not yet been implemented. But, he explained, providers are “anticipating the Affordable Care Act kicking in.” They can’t wait until the end of 2013: “They have to act today. Everywhere I go,” Emanuel, added, “medical schools and hospitals are asking me, ‘How can we cut our costs by 10 to 15 percent?’ “This is doable, since there is so much fat in the system” said Emanuel.
I don’t know what it means. It rose so fast and so long maybe it’s just finally leveling out.
But I am sure that it got national attention. After all President Obama has been making multiple speeches in multiple states where he was able to repeat such good news in ways sure to get press coverage.
Oh, I see. Never mind.
I don’t have the links, but during the last attempt at health care reform during the Clinton era, didn’t health care costs decrease in anticipation before taking off again after reform didn’t pass?
Yes, I am not surprised that there may be some anticipation of cost cutting among providers. Its desirable to cut costs in terms of payments to providers, but we have to be careful that it doesn’t wrap around to cuts in care provision or care quality — not so easy to determine right away…Making sure that payments to providers are controlled while providing adequate quantity and quality of services is a critical challenge in innovation and tough oversight by governing entities…there is a real link here to fraud and abuse prevention
Cutting the rate of growth for Medicare is good, but I don’t see how the program can stay decoupled from the rest of the health care system for long.
All politics aside, such a leveling off of increase in expense would be good for everybody.
And politically, it could help make sure that Medicare is there for younger people when they need it.
It’s a good thing.
I look forward to a well-reasoned and informative comment thread for this post.
I don’t know what he’s saying in Michigan or Minnesota. I can’t watch cable anymore, so ordinarily I go to state newspapers for that, but that’s always true in Presidential campaigns. They want to be in the newspaper and on the news in the state(s) in which they’re actually running. Hence, Obama is in the midwest.
Bush was good at it, in 2004. He got tons and tons of local (Ohio) coverage. Kerry was not so good at it.
Zeke has it right. Making these changes takes time, which was the argument for why they should be pushed out so far into the future. I’m not convinced that was a strong argument, but it wasn’t an irrational one.
But I’d reinforce two points here:
1) I’ve long argued that regulation in and of itself, even if there is no spending to accompany it, can have real impact. There are even secondary effects from it. States were empowered by ACA to have greater regulatory authority – so even if that regulatory authority hasn’t yet been exercised, companies know that the power exists, and at least some will take the conservative route and not push the boundaries too hard. Ask any company and they’ll tell you it’s better to self-regulate than have that regulation imposed. Politicians and courts are unpredictable, so if there’s a trend establishing to clamp down, the market will do at least some of that work for you.
2) Aside from ACA, the policy debate surrounding the deficit has been clear that Medicare is the perceived heart of the problem. Related to my comments above, those responsible care providers (doctors, hospitals, etc.) that are taking a long view are going to act now. The way Medicare works is that reimbursement rates are generally set independently of costs. So there’s no benefit to having high costs for Medicare covered procedures (something that is not true for insurer covered and out of pocket procedures). If Congress is going to balance the budget through cutting Medicare payments (as opposed to services) then the providers are best served by dialing up the cost-cutting measures to 11 now. By the time the reduced payments come through, they won’t have time to actually do the cost saving. The folks that really scam Medicare won’t change a thing, so it’s going to take regulation and reduced payments to actually get them in line, but fortunately most of the healthcare system aren’t active grifters.
A lot of the problem on the cost side really is a lack of willpower and a lack of cooperation. There’s not much incentive for care providers to band together (and some actual legal risks if they do). Insurers have wanted to negotiate for lower drug prices but with hundreds of insurers, none are large enough to effectively do so and none have the kind of authority that a government enjoys. The drug companies know that the insurers can’t drop cover of their medication, so the insurers have little leverage. And if the insurers all got together to demand lower prices, they’d be at risk for being sued for price collusion. Mostly they simply don’t try, but they also don’t have a lot to work with either. Regulation is forcing their hand and in some cases giving them more power.
They ratcheted up Medicare fraud investigations.
They had congressional testimony that they could save 70 billion a year if they’d just aggressively prosecute grifters. I wonder how much is due to that chilling effect.
Villago Delenda Est
This is breathtakingly simple:
If you want to control costs…
Control profit taking by various parasites.
mike in dc
Sooner or later it would have to hit a wall anyway. There’s a realistic ceiling on how big of a chunk of the national economy health care can be, and it’s (probably) way below 50%. I doubt it could become more than a third of the economy, because pressure by those paying the bills(large employers, government, and individual policy holders) would tend to cap it off.
No one is yet talking about true effectiveness of care or efficient care. Nipping around the edges, there is acknowledgement that there are some healthcare costs that are a result of poor or inadequate care. For example, there is a lot of interest in hospital readmissions and preventable admissions. Its a hard picture to paint however as some of the poor compliance with care or inadequate care is because of patient decisions.
We also do not know how to fully attribute inpatient or other outpatient care that could have been avoided but requires expensive medication. Somehow, the analyses that link those cause and effect outcomes are not done adequately and frequently enough for there to be a consensus on what causes what, or the absence of what leads to what outcome and cost.
Though many health plans have data warehouses as do large employers, I don’t think that the level of analyses answers many of these questions…indeed many are strangers to their own data — except for tracking their financials. I don’t think many are very interested in seriously examining outcomes and I see that as ultimately the responsibility of government.
I think that some of the increased attention to fraud, is as you indicate, to have a chilling effect. It makses sense to “show them the stick” as you start rachetting down payments. While I agree that there is not rampant fraud and abuse, there is probably more than most people think. Take a look at one of your explanation of benefit reports from your employer or health plan, or from Medicare. If you have been receiving anything but infrequent care, you may not be able to tell heads from tails about what you have or have not received — particularly after an inpatient stay. Some of the “questionnable” services may just be “errors”, which is why some of these activities are not just called “fraud and abuse”, but “program integrity” or error management. Its shades of gray for “errors” that may be costing millions per year….
I’m trying to figure out why any corporation would voluntarily cut costs PRIOR to the ACA cuts kicking in. Perhaps they are just cutting out their fraud?
Because there are incentives in the PPACA for hospitals to deliver: reduce readmission rates, for example. When they don’t “coordinate care” and just release people from the hospital, people end up back in the hospital, which is wildly expensive, not to mention not much fun for the person who ends up back in the hospital.
The word they all use is “fragmented”. US health care is fragmented. That’s part of why it’s so expensive. Medicare is a huge purchaser of health care services. They should have a lot of clout. Medicare should influence how health care is delivered, in my view. I don’t know why Medicare wouldn’t use the fact that they pay the bills to tell providers they have to cut costs. Any huge private purchaser of health care would do the same thing. They’d be crazy not to.
I run a small business. Every year for the last 7 years, our premiums have increased by between 13% and 18%.
We just got our renewal and the increase is 2.5%. They are making minor changes to our out-of-network benefits as a cost-cutting measure, but nothing heinous. I have no idea how that is related to the Affordable Care Act, but no one is going to convince me that it’s a coincidence.
marginalized for stating documented facts
More horseshit. More lies from our corrupt collusive cartel-ridden medical-industrial complex. More scams by our doctors and hospitals to convince us that costs are going to come down without a nationalized single-payer health care system.
The American medical-industrial complex knows exactly how to cut the costs of medical schools and hospitals.
Shut down the AMA and let as many medical students as can qualify attend medical school so the supply of American doctors skyrockets and American MDs’ salaries collapse down to the $80,000 median range doctors gets paid in Europe instead of the $230,000 median salary for a general practice MD here in America.
Gee. I don’t seem to see the AMA doing that, do you?
Let’s listen to the what the AMA has had to say on the subject of opening up admissions to medical schoosl in America, so that all the American pre-med students who want to become doctors and can qualify get to attend medical school.
What do we hear?
Hospitals know exactly how to cut costs. Stop signing sweetheart contracts with medical devicemakers for a share of the profits on their wildly overpriced devices (manfactured for $40, sold for $1200). Stop signing non-disclosure agreements with medical devicemakers and doctors and other participants in the medical-industrial complex to make certain potential competitors can’t find out the price so as to compete.
Take a gander at Crook Alert!! Drug and Medical Device Companies Are Bribing Our Doctors and Exerting Undue Influence on Research. Your blood pressure with go through the roof.
11-3-09 NYTimes Eli Lily Pays Off 3,971 Doctors Indluding One from Stanford Medical School
4-29-09 Institute of Medicine Calls for Doctors to Stop Taking Gifts from Drug Makers
1-16-10 NYTimes Johnson & Johnson Accused of Drug Kickbacks
7-22-10 NYTimes–Harvard Medical School Belatedly Limits Payments By Drug Companies to Faculty
9-14-10 NYTimes–Medical Industry Ties Often Undisclosed in Journals
12-5-10 NYTimes—Abbott Labs, St.Joseph Medical Center, Cardiologist, Dr.Mark Midei Accused of Unnecessary Procedures
The Journal of the American Medical Association Says Doctors Should Stop Taking Bribes from Drug Companies
This one is really unbelievable, so I’ll link directly to it.
Hey, Kay! Do you hear the AMA calling for doctors to stop taking bribes from drug companies?
So the real question here, Kay is…do you really believe this horseshit, or are you so gullible you actually buy this blatant scam?
The goddamn doctors and hospitals and medical devicemakers and health insurers and imaging clinics and blood work labs know exactly how to cut the cost of American medical care to something that’s in line with the costs of medical care in the rest of the developed world:
Stop the bribes.
Stop the kickbacks.
Stop the sweetheart contracts.
Stop the nondisclosure agreements.
Stop letting doctors run hospitals.
Stop letting doctors form clinics and set up imaging labs and blood work labs and then charging their buddies in the hospitals 10,000% markups on their insanely overpriced CT scans and CBC Chem-7 blood workups.
That’s why a CT scan in France costs $232 while the exact same CT scan in America with the exact same goddamn machine costs between $950 and $1850.
More at New York Times article “U.S. government examining doctor kickbacks for medical devices, “Barnaby J. Feder, March 24, 2008.
Feds weigh in on St. Jude kickback case
Neurosurgeon Admits Kickbacks from Medical Device Manufacturers
Kickbacks for doctors: `Use 100 medicated stents and get a car for free’
And the list goes on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on. And on.