That’s Drew Altman’s message about the increase in the rate of increase in healthcare costs:
Rather like a broken record, I have been warning for years that historically low rates of increase in health-care spending would not last. Now it’s time for a different warning: The higher rates of growth now expected are moderate and should be seen in context. Media outlets–especially headline writers–should take care not to dramatize them.
The chart above shows why. Whatever the wishful thinking, the slowed rates of 2008 to 2013 did not represent a watershed period when we had some secret formula for controlling growth in health spending; they were an aberration. Spending grew by an average annual per capita rate of 3.1% during that period, compared with much higher rates in the past and a projected 4.9% average growth rate for 2014 to 2024. But the projected 2014-24 growth rate is moderate by historical standards, and a bounce back to the higher growth rates of the past is unlikely given the many changes in the marketplace and in public programs aimed at restraining costs and producing greater value per health-care dollar. The increases in premiums that employers and most Americans pay for group coverage are likely to remain moderate for the immediate future.
The “moderate increases” he’s talking about are between three and four times the rate of increase in costs in the rest of the economy and three to four times the rate of increase in wages outside the healthcare sector.
At the risk of becoming a broken record myself, healthcare’s privileged position in being as highly subsidized as it is (to the tune of something between 50% and 75% of all healthcare spending coming from government in one way or another) makes it something of a sure thing. That siphons away investment that might go to sectors that employ more people per dollar income and might actually raise wages for the 90% of Americans who aren’t seeing much in the wage of wage increases. Its high degree of subsidization creates a built-in thirst for ever higher taxes, something that also threatens economic activity.
Bobby McFerrin – Director of Propoganda
Demographics are now hitting. As the boomers age, they will fall into the group with the highest medical costs, so per capita spending should be expected to go up. However, Medicare spending has been pulled back in some areas, and the full cuts have not hit yet. How that plays out remains to be seen. But, if you want to cut it further, you really need to address private insurance spending, the market driven part of health care. It is that spending which largely drives up hospital spending.
http://medpac.gov/documents/congressional-testimony/testimony-hospital-policy-issues-(ways-and-means).pdf?sfvrsn=0
Steve
The reason is only relevant to the strategies for solving it not as to whether it’s a problem or not. I don’t care whether healthcare costs are rising faster than non-healthcare prices due to demographics or due to the evergreen waste, fraud, and abuse. The problem still needs to be resolved.
I’ve been warning about this for 30 years so I’m not overly impressed by your demographic change argument. It’s not as though a bunch of 65 year olds were plopped on our doorstep in the dead of night. We’ve been aware of our structural problems since 1965.
“It’s not as though a bunch of 65 year olds were plopped on our doorstep in the dead of night. We’ve been aware of our structural problems since 1965.”
Businesses, those that have to actually manage, would have been preparing for years. We do in our businesses. Government ( or businesses that have govt clout) just whine about more taxes or subsidy, with the usual heart tugging rationale.
The end game is approaching.
A recent audit by the HHS inspector general’s office revealed how poorly the taxpayer-backed (subsidized) Obamacare co-ops have been functioning. Such a dismal report contrasts the rosy picture painted by the WH just last Spring, as to how these co-ops were doing, which, IMO, is another brutal example of this administration’s manipulative dishonesty in deliberately streaming more misinformation than facts to the public from the very inception of the PPACA.
While this audit only goes through the end of 2014, the noted fiscal problems have continued throughout 2015, even with higher enrollment figures.
“The end game is approaching.”
Disability benefits under SS become insolvent next year, 2016. SS is supposedly running out of money in 2033, and officials are cautioning seniors they might only receive 77% of their promised payments at that time — a date, though, that keeps shifting downwards as it was 2041 some 6 years back. And, medicare runs into serious problems somewhere around 2030. But, like everything else in government, these issues become political nut-busters for any party who attempts to put them on the table for serious-mined reform — IOW addressing unpopular preventative remedies now, rather than cowardly dismissing them so someone else can deal with them, “down the road.”
We do in our businesses.
In fact, for some such expenses you are required to by law. Amazing how prudence is mandated for some but not others.
Yes, ice, some by law. But the fact of the matter is that we are good stewards of our companies, because it’s good business, contrary to infantile crap criticism from some quarters. The vast majority of businesses do the same, especially as they get smaller. You once wisecracked about how I never made the Big Time. I never wanted to be a buyout guy in large businesses. It’s a totally different world. A nasty world. Large Corporate is to be avoided at all costs. If you want to retain your sanity.
It’s a longstanding problem. Kennedy and Eisenhower worried about and fought US Steel. Today……………..
The reasons are very relevant as we need to identify the source of the cost increase. If we want government to solve this problem, when it is not largely driven by government, it makes for a very different discussion.
Steve
The reasons are important even if it’s driven by government. The solution to bad regulations is better regulations not no regulations at all.