No, Obamacare Doesn’t Deserve Credit for Slowing the Growth of Health Spending

For the fourth year in a row,
Medicare’s actuaries report that total national health
spending—encompassing public and private payers—grew modestly in
2012, just 3.7 percent, with the share of the economy devoted to
health spending falling slightly from 17.3 percent down to 17.2
percent. National health spending still grew, in other words, but
the economy grew faster.

The White House spin, as in previous years, is that Obamacare
deserves credit for restraining the nation’s health spending
growth. But at the very least, it’s too early to tell. And there’s
reason to believe that the lingering effects of the recession and
other shifts in the health sector have far more to do with the
slowdown than the health law.

“For years, healthcare costs in America skyrocketed, with brutal
consequences for our country,” notes administration health policy
deputy Jeanne Lambrew
at the White House blog. But Obamacare, “for the first time in
decades, has helped to stop the trend.”

That’s not quite right. The slowdown actually began several
years prior to Obamacare, during the Bush administration. Health
spending growth came in at 9.7 percent in 2002, and started
declining the year after. Spending growth then took a nosedive
between 2007 and 2009, dropping from 6.3 percent to 3.8 percent.
Notably, that was before Obamacare was passed, but coinciding with
the recession. Health spending growth has hovered at basically the
same level since.

So the trend started years before Obamacare, and the biggest
effect coincided with the recession—not the passage of the law. The
president’s health law arrived on the scene late, after the major
changes had already taken place—but the White House wants credit
anyway.

The officials who wrote the report say they can’t have it, at
least not yet. As Medicare Trustee Charles Blahous
pointed out recently, following passage of the law in 2010, the
program’s financial analysts projected that it would
increase health spending through 2016. Medicare did revise
its growth projections downward, but the factors it cited were all
unrelated to Obamacare.

Indeed, Medicare’s officials are once again warning against
conclusions that declare Obamacare the driver of the slowdown.

“The relatively low rates of growth that we’ve seen over the
last four years are consistent with the historical trends that
we’ve seen when we look at health spending and gross domestic
product,” Aaron C. Catlin, one of the report’s coauthors,
said according to The New York Times. “The relatively
low rates of growth that we’ve seen over the last four years … are
consistent with what we’ve seen in post-recessionary periods in the
past,” Catlin also
noted.

Obamacare may be having a small effect on health spending growth
at the margins, and it’s possible it will have a bigger effect in
years to come. But the bulk of the slowdown so far is more likely a
result of the recession over the last few years and significantly
increased adoption of consumer-driven health plans in the years
prior to the economic downturn.