Topics: Obamacare

Obama's victory lap obscures signs of rising health spending

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Opinion,Philip Klein,Columnists,Barack Obama,Obamacare,Health Care,Health Care Exchanges,Magazine

As President Obama took his victory lap Tuesday, declaring that 7.1 million people signed up for coverage through his health care program, he said, “The bottom line is this: Under this law, the share of Americans with insurance is up and the growth of health care costs is down.”

This wasn’t the first time that Obama attempted to credit his health care law for the slowdown in the growth rate of health care spending that’s been recorded in recent years.

For instance, on Nov. 14, as the health care law was coming under fire due to its botched rollout, a defiant Obama said, “I'm not going to walk away from something that has helped the cost of health care grow at its slowest rate in 50 years.”

But lost in all the focus surrounding the end of the March 31 open enrollment deadline was the release of new economic data signaling that the multiyear period of slowing health care costs -- which Obama has inappropriately claimed credit for -- may be coming to a close.

If that’s turns out to be the case, then the current design of Obama’s health care law won’t be sustainable, regardless of what this year’s final open enrollment numbers say.

It’s important to remember that when Obama was selling his expensive health care plan to Americans during a time of rising concern about the national debt, he argued that it was fiscally sensible.

Obama's July 2009 speech to the American Medical Association has become infamous for containing the most emphatic statement of his subsequently broken pledge that under any legislation, Americans would be able to keep their health care plans and doctors, “period.”

In the same speech, Obama also told doctors, “When it comes to the cost of our health care, then, the status quo is unsustainable. Reform is not a luxury, but a necessity.”

He warned, “If we fail to act, one out of every five dollars we earn will be spent on health care within a decade.”

There’s a good reason why the final legislation was formally called the Patient Protection and Affordable Care Act (or ACA, for short).

In the years since the passage of the law, data from actuaries at the Centers for Medicare and Medicaid Services have shown the growth in health care costs slowing to a historically low growth rate of under 4 percent annually. Obama and his allies have tried to credit some of the reforms of the law for making this possible.

But the actuaries, as recently as this January, cited a much simpler explanation: “[The] relative stability since 2009 primarily reflects the lagged impacts of the recent severe economic recession.” The actuaries said the health care law “had a minimal impact on aggregate health spending through 2012.”

CMS actuaries also predicted that as the economy improves and more people gaining coverage through the health care law access services, the rate of spending growth will spike -- by 6.1 percent in 2014. By 2022, actuaries expect total health care expenditures to reach 19.9 percent of gross domestic product. In other words, “one out of every five dollars we earn” - an outcome Obama described as unsustainable.

In late March, as most health care news was focused on the end of the official open enrollment period for the insurance exchanges, the Commerce Department's Bureau of Economic Analysis released new data suggesting that CMS actuaries may be on to something.

BEA found that health spending grew at a 5.6 percent annually adjusted rate for the fourth quarter of 2013 - the fastest clip since 2004. In another report on consumer spending, BEA wrote, “An increase in health care services reflects an additional $13.0 billion in February and $20.0 billion in January for the estimated effect of the ACA on demand for these services.”

As always, it’s important to not jump to premature conclusions based on limited economic data, which is subject to revision and does not represent a trend. But if health care spending growth does accelerate again, defenders of Obamacare will have more to worry about than fixing a broken website.

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