Proof That ObamaCare Will Fuel Health Care Inflation
Health Costs: Americans were promised that ObamaCare would make their health care more affordable. But a pair of studies show the new system has done nothing to lower health costs and will sharply raise them.
Between 2009 and 2011, U.S. health spending rose just 3.9% a year, the lowest annual gains in decades. The Obama administration was quick to claim credit for the slowdown, with Health and Human Services Secretary Kathleen Sebelius saying ObamaCare had "contributed to the slowest sustained growth in health spending in 50 years."
But two new studies make it clear that ObamaCare wasn't behind the slowdown in health spending growth, and its "reforms" will undermine proven cost-control efforts in the years ahead.
A Kaiser Family Foundation study, for example, concluded that the recession and its aftermath - not ObamaCare - accounted for 77% of the slowdown in health spending. And a study by Harvard economist and former Obama adviser David Cutler attributed 40% to the economy.
Most of the rest of the slowdown in spending growth was due to private sector cost-cutting efforts also completely unrelated to ObamaCare.
The Kaiser study, for example, found that companies have been shifting to consumer-driven health plans, which encourage prudent use of health care by exposing employees more directly to the cost of care - through higher deductibles, co-pays and the like.
Health plans that include deductibles climbed from around 50% in 2006 to 75% in 2012, and average deductibles for PPOs nearly doubled over those same years, Kaiser has found.
Companies are also rushing to embrace Health Savings Account plans, which combine even higher deductibles with tax-free savings accounts that can be used to pay out-of-pocket costs. These plans went from virtually nonexistent in 2005 to 20% of the market last year.
The problem is that ObamaCare declares war on these proven cost-control efforts through a host of "reforms" designed to minimize out-of-pocket costs. The law caps deductibles, for example, bans annual spending limits, requires insurers to cover preventive treatments "for free," and imposes rules that will make it harder for companies to offer Health Savings Accounts.
Obama describes all this as a big bonus to families because it appears to make health care cheaper.
And indeed, the law will dramatically cut out-of-pocket spending - driving it down from 11% of all health spending today to 9% in just a few years.
But that will only rekindle health care inflation. The Centers for Medicare and Medicaid Services expect ObamaCare to add $53 billion in health costs next year alone, and $493 billion over the next eight. The Society of Actuaries figures ObamaCare will drive health claims up 32%, and state insurance commissioners are warning of rate shocks once the law goes into effect.
During the Clinton-era health reform debate in the 1990s, former Sen. Phil Gramm used to quip that "if you think health care is expensive now, wait until it's free."
Unless ObamaCare is overturned, we won't have to wait very long to learn that lesson.