Wednesday, May 2, 2012

Medical Costs Slowing Down? Obama Care Will Take Care of That

The New York Times’ In Hopeful Sign, Health Spending is Flattening Out cheerfully announced the slowing of health spending growth in the past few years. The article is featured as the top page one new story. The author, Anita Lowry, ponders whether we might be able to dispense with austerity now that one of our main fiscal problems is solving itself.

Lowry’s readers discover that the recession has been the major cause of the slowdown in health-care spending. Unless recession becomes permanent, we cannot count on it to “bend the medical cost curve downwards” (one of the most awful examples of Washington bureaucratize). But Lowry assures us that there are  other factors “changing the behavior by consumers and health care providers” in the right direction:

“Many experts — and the Medicare and Medicaid center itself — point to the explosion of high-deductible plans, in which consumers have lower premiums but pay more out of pocket, as one main factor. The share of employees enrolled in high-deductible plans surged to 13 percent in 2011 from 3 percent in 2006, according to Mercer Consulting.That means thousands of consumers with an incentive to think twice about heading to the doctor.  RAND Corporation found that health spending among people who shifted into a high-deductible plan dropped [a huge] 14 percent — though the study also found that enrollees cut back on some care that tended to save money in the long run, like vaccinations.”

What Lowry has discovered is that when we use the market to allocate medical care, remarkably “consumers think twice.” They run to the doctor less, they demand generic drugs. Maybe they take better care of themselves.  Well, Lowry grumbles a little about using markets. People might make the wrong decisions. They may forego vaccinations!  But maybe it is worth it because slowing the growth of health spending offers “some fuel for optimism about the federal government’s long-term fiscal performance.” Foolish people may die of the flu, but we can have our infrastructure bank.

It turns out we will not have to worry about the downward-bending health-care cost curve if and when Obama Care goes into effect. In its ObamaCare Rule May Bar HSAs, Low-Cost Health Plans, the Investors Business Daily points out that so-called Bronze health care plans (the high deductible plans of which Lowry writes) will be phased out. They may lower health care costs, but they will not be around. They do not pass the muster of Obama Care’s bureaucrats.

Under ObamaCare, non-partisan technocrats decide which medical services should be expanded and which cut back. Such decisions are not to be left to families who have to “think twice” about how they spend their money.

Dr. Gregory's latest book can be found at


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