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April 21, 2015 at 09:06 AM
(Bloomberg View) — It was a sure bet that if health care costs fell after the Affordable Care Act was passed, we’d see people writing articles about how the law had finally gotten health care costs under control. And so it has come to pass, and so a number of readers have written me to ask whether this is actually true.
The short answer is that I’m far from convinced. For one thing, people seem to be awfully light on probable mechanisms, other than some changes to Medicare, some of which are still in the future, and none of which seems big enough to account for the decrease in cost growth. For another, when you look at the recent history of U.S. health care spending, you see that the rate of growth started to moderate more than a decade ago:
You get a slightly different result if you look at the per-capita growth rate, but not very different:
For a third thing, health care cost growth as a percentage of gross domestic product fell worldwide after the Great Recession.
And however great you think that Obamacare is, it’s probably not so great that it’s causing expenditure growth to slow in Germany.
So what is causing cost growth to slow down? I find this answer given by researchers to be pretty plausible: a combination of changes in private insurance and Medicaid programs as well as a general slowdown of technological innovation in the health care sector.
That last part means that a slowdown in health care costs isn’t necessarily great news — it might mean fewer health-improving, life-extending innovations, which is great for the bean counters but not so great for us fragile humans who would like to live longer, healthier lives. Even for the bean counters, it also presents a risk: that technological innovation will start to speed up again.
Here’s a good example of what I mean:
The 49-year-old woman had had three melanoma growths removed from her skin, but now the disease was spreading further. A several-centimeter-sized growth under her left breast went deep into her chest wall. Some of the tissue in the tumor was dying because of lack of blood flow.
