Drop in Health Care Costs Elicits a Collective Yawn
Policy + Politics

Drop in Health Care Costs Elicits a Collective Yawn

REUTERS/Mike Theiler

Jason Furman, the new chairman of the White House Council of Economic Advisers, released a report on Wednesday that almost any other time would have received considerable attention. The new study showed that health care spending has grown a scant 1.3 percent since 2010, the year the Affordable Care Act was enacted. That is the lowest rate on record for any three-year period and less than a third of the average since 1965.

Economists for years have attributed the declining health care cost curve to the impact of the Great Recession, which discouraged many financially struggling Americans from seeking medical care or led them to cut corners on treatment and prescription drugs.

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Furman’s new report argues that the remarkable continued slowdown is due to “structural changes” and improved practices in the health care economy that are being ushered in under Obamacare. Some of those structural changes include the growth of accountable care organizations, which band general practitioners, specialists and hospitals together to prescribe a patient’s care.

“The slowdown in health care cost growth is more than just an artifact of the 2007-2009 recession: something has changed,” the study asserts. “The fact that the health cost slowdown has persisted so long even as the economy is recovering, the fact that it is reflected in health care prices – not just utilization or coverage, and the fact that it has also shown up in Medicare – which is more insulated from economic trends, all imply that the current slowdown is the result of more than just the recession and its aftermath.”

“Rather, the slowdown appears to reflect ‘structural’ changes in the United States health care system, a conclusion consistent with a substantial body of recent research,” the report concluded. “The ACA is contributing to the recent slow growth in health care prices and spending and is improving quality of care.”

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Furman briefed the White House press corps on the study – a ray of sunshine amid a torrent of bad news about the troubled rollout of Obamacare. But the study received scant attention from The New York Times, Washington Post and other main stream media, and was met with considerable skepticism in other quarters.

“That's great news, but the source of that trend is important,” wrote Dylan Scott on TPM. “For the last couple years, most experts have credited the Great Recession for much of the decline. It makes sense: When times are tough, people are going to do what they can to minimize spending on everything, including health care. . . .The second goal of Obamacare, beyond expanding health coverage to the uninsured, was getting health care costs under control. . . .At some point, the White House needs to prove that the law is achieving that objective.”

Bending the health care cost curve has been a bipartisan goal for decades. Furman’s analysis, however, had the tell-tale signs of public relations talking points from an administration desperate to change the narrative about the disastrous launch of the Healthcare.gov website and public outrage over the cancellation of millions of individual health care plans that failed to meet the new standards of the Affordable Care Act.

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 A more troubling possibility is that President Obama and his advisers have lost so much credibility with the public and Capitol Hill over the Obamacare rollout debacle that it may be difficult for the president to refocus attention on the benefits of the new health law when – and if the website is functioning properly.

The heavily flawed rollout has pushed Obama’s approval rating to the lowest point of his presidency, with 63 percent of Americans disapproving of his handling of the situation and 44 percent believing that he deceived the public about whether they could keep their old health plans if they liked them, according to a recent Washington Post-ABC News poll. The cool media response to Furman’s health care cost report may be a harbinger of the administration’s daunting challenge to regain its credibility and momentum in promoting an historic change in the nation’s health care laws.

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