Though it may seem a bit early for vigorous PPACA back-patting at the White House, President Obama’s team is clearly feeling upbeat about the early returns on health care reform.
In a post this week on The White House Blog, Alan Krueger trumpeted the good news about health care cost containment that is coming in from many sources. Krueger is chairman of the Council of Economic Advisors at the White House.
Krueger’s post aggregated data from various sources, all indicating that skyrocketing health care cost trends may be reversing as PPACA implementation approaches its full glory.
“Prices for personal consumption expenditures (PCE) on health care goods and services rose just 1.1 percent over the 12 months ending in May 2013, the slowest rate of increase in nearly 50 years,” Krueger blogged. “The slowdown in PCE health care inflation has been widespread, with important contributions from two large components: hospital and nursing home services (which comprise 42 percent of total health care expenditures) and outpatient services (which comprise 34 percent of total health care expenditures).”
Here’s some of the data he cited:
- The Bureau of Labor Statistics’ Employer Costs for Employee Compensation survey indicates that for private sector employers offering health insurance, the annualized growth rate of real (inflation-adjusted) costs for workers’ health insurance has slowed from 2.2 percent a year from 2006:Q4 to 2009:Q4 to 1.8 percent a year from 2009:Q4 to 2012:Q4, with a particularly marked slowdown occurring at smaller establishments. For establishments with fewer than 50 employees, employers’ real costs for workers’ health insurance grew just 1 percent a year from 2009:Q4 to 2012:Q4, half the rate observed over the preceding three years.
- During the past several years, the Congressional Budget Office reports that it “has made a series of downward adjustments to its projections of spending for Medicaid and Medicare.” For example, “mostly reflecting the slower growth in the programs’ spending in recent years,” CBO now expects combined spending on the two programs to be about $200 billion lower in 2020 than what it forecast three years ago.
- From 2009 to 2011, nationwide real per capita health expenditures grew at the slowest pace since reporting began in 1960.
- In 2012, premium growth for employer-sponsored insurance was at its lowest rate (3 percent) since the Medical Expenditure Panel Survey started in 1996.
“In 13 states that have publicly reported premiums for 2014, the average of the lowest-cost plan is nearly 20 percent below projections based on CBO premiums,” Krueger intoned, citing data that has been previously reported on BenefitsPro.com. “This includes New York State, which recently announced that health insurance rates in 2014 will be at least 50 percent lower, on average, than the plans currently available in the state. These substantially more affordable plans will soon be available through the new Health Insurance Marketplace established by the PPACA.
“In sum, data from across the economy – covering consumers, government, and private employers – point to the same conclusion: health care cost growth has slowed.“
Krueger argues that this isn’t just a blip but a pattern that has legs to carry it into the future.
“A mounting body of research finds that structural changes are driving a substantial part of the recent slowdown in health care cost growth, suggesting that the trend may persist. Moreover, the fact that the slowdown in cost growth reflects changes in both prices and utilization of medical care – and that the slowdown is apparent in many different aspects of the health care system – further suggests that structural changes are under way,” he said.
Only time will tell whether he can pen an even more bullish health care cost post a year from now.