The Corner

Debunking the Myth of Obamacare as a Cost Cutter

Over at Real Clear Politics, Froma Harrop has a piece modestly called “The Greatness of Obamacare,” where she makes the case that the ACA is responsible for the reduction in health-care-cost growth. Harrop bases her light-on-data piece on a recent report by the White House Council of Economic Advisers (the same policy shop that should have prevented the “if you like your plan, you can keep your plan” debacle). However, Harrop seems unaware that this idea has been debunked. A while back, Yuval Levin showed that the deceleration started long before 2010 (it started in 2003) and in fact it paused at 3.9 percent in 2009 and has stayed there ever since. He had a great chart showing it:

How can anyone looking at this data possibly argue that Obamacare has anything to do with the reduction? In fact, one wonders if the rate would have dropped further without the adoption of the law. There is some evidence that it might have; I mentioned yesterday that Chuck Blahous, a public trustee for Social Security and Medicare, wrote a piece arguing not only that Obamacare has nothing to do with the deceleration in cost, but that, so far, the law is actually responsible for an increase in cost.

And if you need more evidence that the claim that “the ACA is contributing to the recent slow growth in health care prices and spending,” is completely off, today American Enterprise Institute’s Tom Miller and Abby McCloskey have a piece in the Wall Street Journal showing the significant flaws in the CEA report. They also address whether or not the law might actually have a positive impact in the future. 

In his 2008 campaign, Mr. Obama promised that his health-care reform plan would save a typical family $2,500 in annual premiums by the end of his first term. This was Mr. Cutler’s prediction, and it was based on projected rapid returns from larger federal investments in health-information technology, new reinsurance subsidies for high-cost workers, and savings on administrative costs for health insurance.

Those cost savings haven’t materialized. Mr. Cutler maintains they will, mostly through other untested reforms, and the White House Council of Economic Advisers report points to potential savings from fledgling Accountable Care Organizations, lower Medicare reimbursements, value-based payments and hospital readmission penalties. To be sure, some of these programs have and may result in small savings, but they had little effect on savings claimed from 2010 to 2013. For example, even the president’s Council of Economic Advisers hedges that some of the claimed savings from reduced hospital readmission rates “may not be entirely attributable to the ACA payment incentives.”

CMS actuaries find that any positive effects of the ObamaCare delivery system experiments on the cost of health care “remain highly speculative.” When they compare their September 2013 projections with earlier estimates in April 2010, these actuaries find that the law would increase national health spending higher than previously expected by an additional $27 billion in 2019 alone.

To argue that the Affordable Care Act has been and will be a key driver of slower health-care spending is irreconcilable with the most basic facts about such spending over the last decade, as well as with the judgment of the executive branch’s own team of actuaries responsible for health-care accounting and future projections.

The whole thing is here

Incidentally, over at Reason, Ira Stoll notes that the director of the White House Office of Management and Budget for the first year and a half of the Obama administration, Peter Orszag, has been very silent in recent months. It is a shame considering that his fingerprints are all over the claims that Obamacare would be a cost cutter.

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