In the wake of my post on the anniversary of Healthcare.gov, I was gratified to see Megan McArdle devote her Washington Post column to a consideration of the the effectiveness of the ACA in reducing healthcare spending. Short version: it hasn’t been particularly effective.
This is not because people haven’t tried hard enough. Obamacare contained a lot of elements that were expected to realize significant cost savings while actually improving the quality of care.
Among the strategies considered was innovations in preventive care. Despite the considerable sums of money spent that hasn’t been effective:
Preventive care turned out to cost more than it saved, in part because doctors may need to treat a lot of minor conditions to prevent one serious health crisis.
Here are some of the other missteps:
Expanding the number of insured turns out to make emergency room visits rise, not fall, because newly insured people worry less about the cost. A program to reduce hospital readmissions among Medicare patients may have killed thousands, as hospitals tried to avoid admitting patients who might trigger a readmission penalty. A plan to promote new insurance co-ops, a kind of voluntary public option, saw almost all of them fail within six years.
BTW declines in life expectancy are not due to COVID-19:
Source
unless COVID-19 is a time traveller since the decline began in 2014.
She concludes that controlling healthcare costs is politically impossible:
It’s not that we don’t know ways to save money. The system could be run more efficiently by reducing slack, but this would make people wait longer for many tests and treatments, as Canadians and Brits do. Doctor salaries, which averaged $316,000 in 2021, could be trimmed to the levels of German doctors ($183,000) or those in Britain ($138,000). The government could mandate lower drug prices, which would result in Americans losing access to medicines that aren’t worth making at the mandated price, as well as many that aren’t yet developed.
The problem is that these savings aren’t free. Nor are many other potential savings that space prevents me from naming, and that you are perhaps even now preparing to shoot me an email about.
The savings come attached to significant other costs, making them too politically expensive to contemplate. Try to cut doctors’ salaries almost in half, and they will freak out. Tell everyone else that they can’t have the fancy new drug they just read about, or that they have to wait half a year to see a specialist, and they will freak out, too. Politicians know this and won’t take the risk.
Sadly, that dodges the question: can healthcare costs continue to rise? Increasing healthcare spending was one thing when, as in 1960, we devoted 5% of GDP to it. Spending 20% of GDP on it is a different matter.
