Health-care cost projections

Yesterday the Centers for Medicare and Medicaid Services released updated national health expenditure projections through 2021. The headline chart:

Suzy Khimm reports on the findings:

[…] They do expect health-care spending to tick back up as the economy recovers from the recession. At the same time, they project slower cost growth than they have in previous reports.

“We’re projecting that, for the next three years, health-care spending is going to stay near its historic lows,” says Sean Keehan, a senior economist with the Office of the Medicare Actuary. “We think this is due to the recession, but not just that. We think consumers are being more cautious about how much health care they use, too.”

Kevin Drum notices the convergence of growth with or without the Affordable Care Act:

Now, there are two conclusions you can draw from this. First, this report suggests that healthcare reform isn’t likely to rein in spending growth much. That’s the bad news. Second, it suggests that healthcare reform isn’t likely to cost very much. That’s the good news.

Whether the recent slowdown in growth reflects permanent changes in the system or temporary reduction in services due to the recession is a false choice. It’s likely a combination of both. Trying to figure out how both will affect future growth rates is more important question and I’m glad the wonkosphere is working on it.

The implications of growth convergence with or without the ACA is something unique – on the one hand it provides ammunition for those critical of the more grandiose assertions made by supporters about “bending the curve,” yet it also takes a big bite out of critic’s doomsaying about “cost-explosions.” Those of us who recognize that the ACA is largely participatory reform shouldn’t be surprised at all – it was never explicitly designed to contain cost growth, but it does include modest attempts to figure out what might work in the future.


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