Ezra Klein’s Bloomberg View column today is on the slowdown in health-care cost inflation, a heartening trend that’s received a good deal of attention recently. Rightly, he says that we still don’t know really why it’s happening, and ostensibly, the column is just laying out the possible factors and looking how the president’s health-care law is playing a role. Which is why it’s so bizarre that he basically ignores one of the most likely explanations: increased cost sharing in health-care plans, whereby patients spend less on health care because more of the costs are coming out of their pocket rather than being covered by insurance.
We don’t know how much that development has driven the inflation slowdown, but the correlation is there (and fits better than the bad-economy explanation, which, as Klein notes, is problematic since costs were slowing some before the recession). It’s certainly a logical economic argument, and a lot of smart people, incuding plenty of liberals and supporters of the president’s health-care law, think it’s important. In fact, the New York Times’ recent report on the slowdown gave the cost-sharing explanation prominent placement, citing various academic studies that suggest it’s had a significant role. (The author of that New York Times piece? Klein’s wife, Annie Lowrey.)
The column only mentions this factor briefly, noting “the portion of workers with high-deductible plans has increased by 24 percent since 2006,” without even mentioning how that affects their spending habits or the fact that experts point to this as a sea change in health care (its significance, for instance, is not comparable to certain important drugs’ going off patent, as Klein’s parallel placement of these factors suggests).
It also comes up in passing: In arguing against the economic slowdown as an explanation for lower cost inflation, Klein argues that, since we’ve seen Medicare costs drop substantially, too, and Medicare doesn’t leave too many decisions or costs to the consumers whom the bad economy has hurt, it seems unlikely that the recession is playing a big role. This argument actually relies on the idea that, if consumers are given choices, they’d probably spend less and slow cost inflation — but that idea is mentioned nowhere in the column, and the fact that consumers actually have been making more choices in private insurance as costs are slowing there isn’t mentioned (one could also argue, of course, that the fact that Medicare cost growth is slowing without the program having much cost sharing calls the cost-sharing explanation into question — Klein just doesn’t discuss it).
Klein even manages to praise one of the provisions of the Affordable Care Act that actually will encourage cost-sharing, the “Cadillac” excise tax on high-cost health plans, without mentioning how it’s driving consumer choice. Here he quotes another New York Times piece: ”Companies hoping to avoid the tax are beginning to scale back the more generous health benefits they have traditionally offered and to look harder for ways to bring down the overall cost of care.” This quotation suggests that there are a whole bunch of ways employers are trying to push down the cost of their plans, but Klein leaves out the main way they’re actually doing it – by pushing costs and decisions onto consumers/employees. Basically the entire Times piece Klein quotes is about how the Cadillac tax, a measure that starts in 2018 for which employers are starting to adjust now, is driving cost-sharing. Klein cites the piece as evidence that one piece of the ACA is working to control costs, without mentioning how it’s doing so (note that this is sort of a side effect of the Cadillac tax — generally speaking, Obamacare actually makes cost-sharing a lot harder, pushing the market away from it rather than encouraging it).
In all, it’s quite strange that Klein could manage to write a column about how we’re trying to understand this trend without explaining one factor most policy experts think is probably playing a really big role. But it makes a little more sense when you consider that the president’s signature effort to encourage that trend bets on the importance of other factors, and actually will, overall, discourage the Factor That Must Not Be Named and whatever benefits it might bring. It’s almost like Klein wrote the column to defend the president’s preferred policies rather than do dispassionate analysis of them.