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Jonathan Cohn’s Failed Defense of Obamacare October 5, 2014

Posted by geoff in News.
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Jonathan Cohn of the New Republic wrote a defense of Obamacare a week ago, raising 7 points that he thinks show how Obamacare has been successful after its first year.

  1. More people have health insurance.
  2. People who are getting health insurance are almost certainly better off.
  3. “Winners” probably outnumbered “losers” in the new marketplaces.
  4. Premiums in the marketplaces aren’t rising quickly, and more insurers are jumping in to compete.
  5. Employer premiums also aren’t rising quickly.
  6. Overall health care costs are rising at historically low rates.
  7. The net effect on the budget has been to reduce the deficit.

That sounds great, like the plan is working as intended and everybody’s happy now, right?

But ahem. As usual I have a million problems with these claims. And as usual I have a chart. I say “a” chart because I’m just going to focus on #6 for the moment (Mickey Kaus went after #3 and #4): the notion that health care costs are rising really slowly.

He shows this chart, which immediately makes me suspicious, because bundling up the years like that smears the data and smacks of cherry-picking:

slide1_27

So let’s see how that looks when we actually plot it out year-by-year:*

HealthCareExpenditures

Oh yeah. Starting from 1990, just like they did, we find that the average rate of increase since then (the sexy blue dotted line) is exactly equal to the projected rate of increase henceforth (the green line beyond 2013). So there is no “historically low rate” – that’s a figment of his Obamacentric imagination.

These numbers come straight from the CMS (here and here), the same source of the data that Cohn used. I just used it honestly.

*(I apologize for not having data between 1991 and 1999. The CMS data I found in reports that covered those years is inconsistent with the data they currently report (I checked 1990, and 2000-2004). So I left it out. It’s around 13% during the 90’s)

Comments»

1. geoff - October 5, 2014

I would also point out that rising healthcare spending is not necessarily a bad thing. For example, rising computer spending was not a bad thing.

If the value offered by the health sector grows faster than the average value offered by the other sectors, then this metric will look bad, but it might be a very positive thing. As I’ve mentioned before, knee and hip surgeries/replacements were rare 20 years ago, but are now commonplace, driving healthcare spending up. But they have amazing effects on patients’ lives, so I’d say they’re generally worth it.

The problem arises when the costs are going up but the value isn’t. People can argue about how significant that effect is, but medical innovation is estimated to be responsible for half of cost increases. Which is all value, baby.

2. Nanny G - October 5, 2014

Doesn’t the GDP change every year?
If so, pinning health care costs to a % of GDP means that, in lean (like right after 9-11-01 and the housing bubble/banking break at the end of 2008) years, when GDP is low so it looks like the rise of health care costs is higher, BUTwhen things are growing (after the 9-11-01 slow-down ended) or when government controls prices (after ObamaCare went into law) it looks like health care costs are lower?
In all these cases, it is just appearances.
For individuals and families who pay (not being subsidized) health care has consistently gone up.

Also these costs (post-ObamaCare) are omitting all the little extra costs of ObamaCare because they are not part of the actual premium. Many of them are baked into other parts of health care, like extra taxes on medical equipment, no coverage for many drugs once covered, etc.

3. geoff - October 5, 2014

You’re exactly right – the years where the plot rises rapidly correspond to recessions where GDP growth faltered.

Also these costs (post-ObamaCare) are omitting all the little extra costs of ObamaCare because they are not part of the actual premium.

The data in this graph is based on all expenditures, not just premiums.


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