Jonathan Cohn: Does Obamacare Bend the Curve?

[flpoljunkie]

From the Press Conference: Does Obamacare Bend the Curve?
Jonathan Cohn

September 10, 2010

A few minutes ago President Obama got a question on health care reform, based on new projections that supposedly show it will fail to “bend the curve” on costs. But that’s not what the projections show. I was going to write a long post on this—and, sometime soon, maybe I will. But let me quickly go over this, because it’s understandably confusing but very important.

The projections, based on government estimates and published this week in Health Affairs, are an update of projections the government made earlier in the year, while Congress was in the final stages of debating the Affordable Care Act. And the basic storyline hasn’t really changed.

The Affordable Care Act has two basic components.

There are, first, provisions to cut the cost of care—like reductions in what Medicare pays some providers, cuts in subsidies for private insurance companies, and a tax on generous health benefits that economists believe will reduce private health care spending. These features come on line quickly (except for the tax) and, year after year, will reduce what we spend on health care.

The second group of provisions would make insurance more comprehensive and more accessible. These include expansions of Medicaid as well as the creation of subsidies for lower- and middle-income people who buy private insurance. These mostly come on line in 2014 and, when they do, will cause a one-time jump in health care spending.

Put these components together and you get a steady reduction in spending growth, interrupted by a spike in 2014. Here’s what it looks like graphically, from that Health Affairs article:



The sum total of spending between 2011 and 2019 is slightly higher than it would been without reform, but the difference is miniscule—and, arguably, a tiny price to pay for the extra security reform brings to tens of millions of Americans. No less important, the annual rate of growth in 2019, the final year in the projection, is slightly lower than it would have been without reform.

I do mean "slightly": We're talking 6.7 percent growth in national health expenditures versus 6.8, which is basically a rounding error on these sorts of projections. Still, when we talk about “bending the curve,” that’s what we mean--reducing the rate of growth, so that we spend less money in the future. And the curve is bending in the right direction.

Would it be better to reduce the rate of growth--i.e., “bend the curve”--significantly? You bet. But this is still a change for the better.

http://www.tnr.com/print/blog/jonathan-cohn/77587/getting-the-story-straight-health-care-costs

[iamjoy]

1. You Know What Would Bend The Curve

Death panels.

I'm not kidding, but neither am I advocating.

The fact about health care is that there are several factors causing costs to rise.

I'm not going to get into the insurance company leaches and administrative costs that are part of our system. WE all agree on that. However, costs are rising even in countries with government provided health care. Maybe not as much as here, but they are.

Cost are rising because care is so much more robust than it was a generation or two ago. The following were didn't exist (or were very rare) 25 years ago, and are now commonplace
* Ultrasounds to monitor fetal development
* Transplants
* Open-heart surgery
* Angioplasty
* MRIs

Heck, 25 years ago most people paid out of pocket when they went to a provider and submitted their own claim for reimbursement. HMOs around had very small networks.

But we all want the best chance of survival for ourselves, and our family. These great advancements (that not only save our lives, but improve the quality of them) cost money.

So, we can have a system in which those with means can get any treatment they want and those without die. Or we can have a system in which care is rationed by other means. Likelihood of successful outcome is one, but this could easily be labeled a "death panel" to some one who thinks a person ought to have a fighting chance, no matter the odds.

[flpoljunkie]

2. Hope what you're suggesting is not 'death panels,' but elimination of unnecessary, duplicative tests

[customerserviceguy]

4. And where's the incentive for that?

Doctors do that to avoid having to spend all day in court. There's nothing in the HCR bill that changes their fear of liability suits.

[flpoljunkie]

6. Over testing is done not so much to avoid malpractice law suits, but for profits.

That's a fact.

[customerserviceguy]

9. It depends on whether or not

the doctor ordering the tests either owns the lab, or gets a kickback from them.

[iamjoy]

8. It's One And The Same

Are you talking about the "defensive" medicine some say providers do because of fears of malpractice? Well, if that extra test or procedure might save your life or that of a loved one, wouldn't you want it?

If it's an experimental procedure, but nothing else has worked, and it was you (or a loved one) dying you'd want that chance, right?

pardon the expression, but it's all a matter of whose ox is being gored, right? Only in this case, who is doing the goring matters too. That is to say, opponents of government provided health care accept care being rationed by ability to pay and insurance companies acting as "death panels."

[customerserviceguy]

3. Pure guessing game

We have no idea what distortions will take place in the costs of healthcare in this country as all of the players in that marketplace adapt to the changes wrought by the HCR bill. Every provider of a healthcare system or product is going to fine ways around the restrictions, ways to take advantage of the new monies that might flow their way (especially ins. co's) and as there are no cost-containment measures, they'll be free to do so.

We still have to figure out exactly what ways that will happen. Trying to extrapolate anything with current knowledge is folly.

[frazzled]

5. We're covering 30 million more people and costs go down

after initial rise to increase coverage. Plus, this chart fails to take into account long-term projections.

In other words, 2014 is a one-time increase in spending level as we get 30 million new people covered. After 2014, costs grow more slowly than they would without the health-care reform bill. And as some of you know, the major spending controls, like the excise tax and the Medicare board, only really start in 2018, so we can expect spending to slow even more in the years beyond this projection. And that, of course, is exactly what the Congressional Budget Office found when it looked at the bill on a longer timeframe.

http://voices.washingtonpost.com/ezra-klein/2010/09/does_health-care_reform_bend_t.html

[flpoljunkie]

7. Good point. The projected cost savings in the second decade are expected to be $1 trillion.

[Igel]

10. The chart is based on current law.

The assumptions have to be that the Congressional findings are correct, and that the law as written will be followed, unchanged.

Current law stipulates pretty hefty Medicaid payment cuts. There was recently a bit of a fracas over precisely those. They may be mandated, but they won't happen.

In other words, the assumptions are known to be at least in part false; how false they are is unknowable. Therefore, of course the conclusions must be true. :crazy:

[frazzled]

11. There are no Medicare benefit cuts in the bill

The only cuts are of payments to PRIVATE companies running Medicare Advantage plans, a Republican scam in which the government pays an extra 15% to private companies to deliver Medicare services. But there are no cuts to individual benefits. The savings in the current law roll out over time, some not kicking in until 2018. That is why this chart is misleading. The Affordable Care Act will reduce health care costs over time.