Good news, there is no need this year for the Independent Payment Advisory Board to meet. IPAB is an entity created by Obamacare that is designated to make payment reforms to Medicare to bring down the rate of Medicare spending inflation to the general rate of growth in the economy. Congress can overrule IPAB’s recommendations if they come up with a seperate plan that saves as much or more than IPAB’s plan.
However IPAB is not needed when medical inflation for Medicare is beneath the rate of economic growth. And that is what is happening.
Prices for personal consumption expenditures (PCE) on health care goods and services rose just 1.1 percent over the twelve months ending in May 2013, the slowest rate of increase in nearly 50 years. The slowdown in PCE health care inflation has been widespread…
Data from the Bureau of Labor Statistics’ Employer Costs for Employee Compensation survey indicate that for private sector employers offering health insurance, the annualized growth rate of real (inflation-adjusted) costs for workers’ health insurance has slowed from 2.2 percent a year from 2006:Q4 to 2009:Q4 to 1.8 percent a year from 2009:Q4 to 2012:Q4
What this means, if it is a sustainable trend, is systemically, health care is going from a red alert, going to destroy the federal budget, apple pie and day/night doubleheaders to a medium size problem that needs consistent monitoring, tinkering and experimentation. CBO is figuring federal Medicare/Medicaid committments in 2020 are $200 billion less than what they projected a few years ago. As the saying goes, a few hundred billion here, a few hundred billion there, and sooner or later we’re talking about real money.
Nina
Golly. It’s almost like the laws governing health care have changed or something. When might that have happened?
Villago Delenda Est
Good news, everyone! I’ve fixed the poison slime pipes!
H.K. Anders
What? No death panel this year?
But I was looking forward to killing all the Republican grandmas!
H.K. Anders
What? No death panel this year?
But I was looking forward to killing all the Republican grandmas!
RaflW
Well, clearly Obummer’s cabinet cooked the medical inflation numbers and the general inflation numbers so as to avoid having to inaugurate the DeathPanelz® before Bohner’s ultraawesome defund-CR vote.
Higgs Boson's Mate
Meanwhile, John Boehner is issuing piteous pleas for Obama’s help in dismantling ACA. Those numbers couldn’t have had anything to do with that, could they?
ericblair
Is there going to be a significant effect on the expected health of new Medicare participants after Obamacare really kicks in? I’d assume a fair number of 65.0-year-olds up to now have been in pretty bad shape after dragging themselves across the finish line with no health insurance.
Villago Delenda Est
@Higgs Boson’s Mate:
I revel in the pathetic orange shitstain’s pain. It’s like a tonic to me.
Suffer, asshole. Suffer.
Chyron HR
But Pure Progressives and Tea Partiers agree: Reducing Medicare spending is the same thing as cutting Medicare. KILL THE BILL!
Xantar
Is there some way to argue that this means Obama has cut Medicare?
Richard Mayhew
@ericblair: Intuitively I would say yes, people who have been counting down the seconds until they qualify for Medicare are probably going to be significantly better off.
However, this is where actuaries make very painful statements — if health insurance improves health and longevity (the Oregon MA study supports this), more people surviving to old age may mean more expenses.
As a society and a moral being, this is a good thing. It may just cost a bit which we should pay.
Citizen_X
I blame Obama.
Morbo
But I was told nothing in the ACA would control costs!
Seriously it is funny to watch all the right wingers at work during the annual enrollment meeting. They’ve been consistently incredulous at how little the premiums have gone up (and they even went down last year) since evil Obamacare passed.
Villago Delenda Est
@Richard Mayhew:
The issue, of course, is who pays for it? With the obscene structure of our economy now, where a relative handful of rentier parasites feed on the blood of everyone else, something has to give.
This society has the resources to insure that everyone has a home, clothing, medical care, and a basic diet. It simply chooses not to do so because of the voracious greed of the parasite overclass.
Litlebritdifrnt
Somewhat OT but finally people are beginning to figure out and publicize the fact that the Walton heirs are the biggest welfare queens on the planet. To the tune of $900,000 per store. The Forbes richest list is out and spurred this piece at the Guardian.
http://www.theguardian.com/commentisfree/2013/sep/18/forbes-rich-list-celebrate-inequality
I would love it if someone front paged this article.
Yatsuno
Does this mean I can take the Planet Express ship out for a joyride?
PS: someone come shoot me. I’ve sucked down half a pack of Halls just this morning.
jl
Anybody have any guesses on cause of slowdown in growth of expenditures?
Maybe Richard has some ideas from the insurer perspective?
ranchandsyrup
Thanks Prof. Farnsworth. Been digging your contributions to the Juice machine. Keep it up until Cole turns back into a heel WWE style.
Napoleon
This just out today in the local paper about the Cleveland Clinic which maybe related:
http://www.cleveland.com/healthfit/index.ssf/2013/09/cleveland_clinic_to_cut_330_mi.html#incart_river_default#incart_m-rpt-2
ruemara
@Villago Delenda Est: Still trying to solo that bastard.
Tone in DC
@Higgs Boson’s Mate:
My eyes are starting to hurt from such text on this screen.
Orange Julius wants BHO’s help in de-funding the ACA?
That is just too precious. Sorry, Johnny Walker/Boner, the prez isn’t as dumb as you look.
EthylEster
Glad to hear this.
But I’m confused.
I saw this CSPAN broadcast yesterday. In it CBO Director Elmendorf makes some pretty depressing comments about how entitlement spending is going to kill us. Now I know that SS spending is not going to kill us unless we decide to do nothing to achieve a relatively easy fix (raise limit on contribution, etc). But he had some fairly depressing things to say about health care cost…and numbers to back it up. So…what gives?
http://www.c-span.org/Events/CBO-to-Release-Annual-Budget-and-Economic-Outlook/10737441474/
Richard Mayhew
@EthylEster: The basic story is that healthcare spending is a problem and will continue to be a problem as long as the United States is determined to have a moderately high service for old people safety net and relatively low taxes.
That is the crux of the problem. Bending the cost curve helps on the expenses of the moderately high service for old people safety net, but as long as federal tax revenue as a % of GDP is stuck between 18% to 20% in non-OH MY GOD depression scenarios, there is a gap between what has been promised and what is being taken in to pay for those promises. Bending the curve reduces that gap, but does not elimiante it.
Richard Mayhew
@jl: You really want to see blood :)
Tossing that question into a beer fueled discussion of health economists and actuaries is a good way to get a fight started. Right now, the short story is we don’t know… actually we don’t know relative impact with certainty, but most health econ nerds will list the following and apply varying weights.
1) Recession pushes off “nice to have spending” on health care
2) High deductible plans are making people more cost aware
3) Changes in payment models and tiering networks are driving people to lower cost providers
4) PPACA reforms are having an impact (ACO, Cadillac tax, bundled payments, pay for quality instead of quantity etc)
5) Demographs favor Medicare right now as there is a bulge of fairly “cheap” new Medicare recipients who temporarily depress spending
6) The Flying Spaghetti Monster is most kind
NonyNony
@Napoleon:
All right, I want to know what this is about:
What the hell is she saying here exactly? Didn’t the “burden of costs” previously fall onto the insurance companies and thus, indirectly, the patients already? Is she saying that they aren’t going to be able to cheat Medicare/Medicaid as much as they used to? Is she saying that suddenly the insurance companies are now playing hardball to get better rates where before they just handed out fat sacks of cash willy-nilly to hospitals?
This smells like bullshit executive speak for “we’ve been dying to lay people off for a while, and Obamacare gives us something to blame”, but I’m willing to believe that costs are going to be rising for hospitals given the new laws. So how does that work exactly?
ETA: To explain further – Everything I’ve read has suggested that the big problem with the PPACA laws was that it didn’t do enough to control costs on the provider level – it was concerned about controlling costs at the insurer level. But this sounds like whatever is happening is a huge burden on the providers – so why exactly is that? The newspaper article is lousy but it’s from the Plain Dealer which was a moderately terrible paper when I actually lived in Cleveland but in the last decade has seemed to aspire to become as awful as the Columbus Dispatch is, so it’s singularly uninformative.
Patricia Kayden
@Higgs Boson’s Mate: Why in the world would anyone in their right mind believe President Obama is going to unravel his key legislative accomplishment? Bizarre.