Nonsequitur: Health Care Spending Good News or Bad?

December 18, 2014

The Centers for Medicare & Medicaid Services touted the slowing of cost growth for health services.  In other words, health care costs are still going up, just slower than they were a couple years ago.  Medicare, private health care insurance and employer provided health insurance spending decreased.  Medicaid spending increased 6.1%.  This, according to CMS Administrator Marilyn Tavenner, shows that Obamacare is working.

Of course, this report leaves out the fact that people are using fewer healthcare services now.  Hospitals are seeing a significant decline in admissions, a trend that is expected to continue.  Workers with employer provided health care coverage are also using fewer outpatient services.  This isn’t surprising given the high deductibles, copayments and coinsurance that are now part of most government approved health care plans.  New Medicare policies also incentivize hospitals and doctors minimizing the amount of care provided.

Demand is down because costs have shifted from the insurer to the patient, which is noted by the CMS report itself: “In 2013, households accounted for the largest share of spending (28 percent).”  With many workers facing decreased earnings and increased costs, any elective or non-emergency health care procedures must be put off.  That is why costs are growing slowly.  Spending is down because usage is down.  Usage is down because patient out-of-pocket costs are up.  This is not what we were promised.

 

 

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