The graph above was produced by economist Mark Perry. What about healthcare insurance costs? (That was my immediate question.) Fortunately, Statista has that for me.
As you can see individual healthcare insurance prices have more than trebled since 2020. Not just fast but faster than hospital costs or medical service costs. Both of the latter have increased faster than wages in general.
Some are concluding from the above that the Affordable Care Act has failed in slowing the increase in healthcare costs and while that’s certainly the case it wasn’t my conclusion. My conclusion is, I have said many times, that the incentives in healthcare are completely out of whack. A change to single payer is not merely unaffordable and unsustainable in the absence of the will to constrain costs which is demonstrably absent, insurance isn’t the primary problem.
Please, please don’t tell me that other countries do it so it must be possible, particularly not if you’re pointing to tiny countries with high social cohesion. We are starting from too high a baseline. Pointing to insurance is misdirection. It’s the prices, stupid.
As I’ve also said before, I have all sorts of proposals for fixing the situation but everybody hates them so they’re not worth repeating.
Dave, does this 2017 assessment of the Affordable Care Act track with yours? I just ran across it, and am curious.
https://www.adamtownsend.me/an-explainer-why-its-so-hard-to-detangle-obamacare/
At a minimum it speaks to the problem of too much complexity in government.
I agree with you that the incentive structure needs a radical overhaul.
You said this “As you can see individual healthcare insurance prices have more than trebled since 2020.” Unless I am reading it wrong it seems to show that it was about $7500 in 2020 and $9300 in 2023. (I am not sure what Statista is measuring here. Average family plan is now about $24,000. Besides which if we are looking at the ACA then what we should have is a comparison of cost increase rates before and after the ACA. I have linked to some here in the past showing that health care spending has decreased a lot recently but maybe those were behind paywalls so here is one from WaPo. Note that it uses the same sources as Jindal, one of the conservatives promoting the idea that the ACA caused costs to increase.
“2000-2005: 69 percent increase
2005-2010: 27 percent increase
2010-2015: 27 percent increase
2015-2020: 22 percent increase
2020-2023: 11 percent increase.
In other words, the cost curve slowly has been bending.
In fact, while premiums previously rose at a faster rate than inflation, they now lag inflation. Matthew Fielder, former chief economist for the Council of Economic Advisers and now a health policy analyst at the Brookings Institution, calculated for The Fact Checker the annual rate increase in premiums after adjusting for inflation.
2000-2010: 5.7 percent increase
2010-2020: 2.8 percent increase
2020-2023: 1.1 percent decrease”
Note that Jindal likes to use the Millman Index, a site that claims to look at all expenses including out of pocket spending, however that index also shows spending rate increases down since ACA was passed.
https://archive.ph/mLFa8
Anyway, you said this “the Affordable Care Act has failed in slowing the increase in healthcare costs and while that’s certainly the case “. I cant find any data to support that belief so what is your data on which you base that claim? I think you can maybe claim that the ACA should not get credit for slowing the increase, but the increase did slow.
Steve
It’s at the link. Statista is measuring single employee insurance. $2,471 in 2000, over $8,000 today.
Ahhh, 2000 and not 2020. However, per the KFF numbers used by Jindal (they provide reliable numbers and most people with private insurance are on family plans they have through their place of employment) most of that occurred before 2010, what most people use as the year for the start of the ACA.
Steve
Regarding the Statista graph, it shows a more-or-less linear increase, which would be a decrease in rate of growth over time.
Regrading Mark Perry’s graph, the higher rates of increase are associated with increasingly skilled domestic labor not conducive to mechanization or outsourcing.
I would be careful about the Statista numbers since we dont know what they mean. Conventionally, single insurance usually refers to insurance that a single person buys when it is not covered by their place of employment. That’s a relatively small number of people. Most people who have private insurance get it through their place of work and it’s most often a family plan. You can also sort of double check this by looking at per capita health care spending numbers. What you see in both cases is that since the ACA was in place, 2010, health care spending has pretty dramatically slowed.
Steve
Nice review of Medicare at 60 years. They note that while Medicare spending increases have slowed, they expect it to increase again due to population increase. They expect prices to continue decreasing.
https://onlinelibrary.wiley.com/doi/full/10.1111/1475-6773.14415
Steve