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It looks like Bowles and Simpson and all of the other catfood peddlers just might have to rethink the excuse they use for their obsession with hurting old people: rising health care spending might not bankrupt the nation after all. Health spending has been slowing down for the last several years, leading the CBO to revise its projections for Medicare and Medicaid spending downward by hundreds of billions of dollars. Now, two new studies show that that slowdown appears to be systemic and potentially permanent, in part because of the recession but because of other factors.
Instead, the studies conclude, everything from consumer price shopping to patent expirations on brand name drugs is transforming the world's most expensive healthcare system in ways that will constrain costs for years to come.
If their argument proves correct, the Medicare health plan for the elderly could pay out $401 billion less in 2021 than government actuaries have projected, one of the studies calculates, while total spending over the period from 2013 to 2022 would be $770 billion less.
Among other factors, the studies found that rising out-of-pocket payments had played a major role in the decline. The proportion of workers with employer-sponsored health insurance enrolled in a plan that required a deductible climbed to about three-quarters in 2012 from about half in 2006, the Kaiser Family Foundation has found. Moreover, those deductibles—the amount a person needs to pay out of pocket before insurance steps in to cover claims—have risen sharply. That exposes workers to a larger share of their own health costs, and generally forces them to spend less.
So the high cost of health care for average people with employer-based insurance is still a problem and still has to be addressed through health care reform on the provider side, rather than the insurance side. The cost issue in health care, the fact that the U.S. spends insanely higher amounts than any other industrialized nation for worse outcomes, is still a major problem.
But, and this is a big but, spending growth for patients whose health benefits haven’t changed, including Medicare and Medicaid enrollees, has also slowed. And that means that Washington's obsession with the deficit—and the large part of it health care spending comprises—has been significantly overstated. Medicare and Medicaid are not likely to be bankrupting the nation any time soon, and should not be included in any grand bargain. In fact, thee doesn't need to be a grand bargain at all. The deficit is not strangling us. There are far more important priorities for our economy. Like jobs.
Originally posted to Joan McCarter on Tue May 07, 2013 at 08:40 AM PDT.