Tag: Health care system

The Bill Comes Due

Remember all that talk about how Obamacare was going to save us all this money? Evil uncaring heretics like me pointed out that this was impossible. You can not insure more people and you can not outlaw cheap insurance without increasing healthcare costs. Romneycare saw costs soar after implementation because … funny story … when people have insurance they see the doctor more often. Even the dreaded ER visits went up.

But no, we just didn’t understand. We were letting our hatred of poor people cloud our vision. Why the cost curve bent down in 2009-2013, which was proof that Obamacare was keeping costs down even before it was implemented!

Um … oops:

As I reported earlier this month, there were already signs of growing health care spending in the fourth quarter of 2013, when it jumped 5.6 percent, which had been the fastest clip since 2004.

But the 9.9 percent jump (on an annualized basis) came in the quarter from January through March, which was the first three months in which individuals who gaining coverage through the law were able to use it. That was the fastest rate recorded since health care spending grew at a 10 percent rate in the third quarter of 1980.

The data released on Wednesday, as part of the government’s report on gross domestic product, is preliminary and subject to revision in the coming months.

Note that first quarter GDP growth came in at 0.1%, so the non-healthcare section of the economy shrank by 1% last quarter.

So … are the Obamacare supporters admitting that they were wrong? Uh, not exactly:

But let’s be very clear about what’s happening here: an improving economy is allowing Americans to now spend more on health care, while people who have previously been uninsured are finally getting insurance and are using their care. In the meantime, health care prices are still continuing to grow at low rates, reducing Americans’ health costs.

ThinkRegress goes on to say that, in the long run, healthcare costs will come down because the IPAB will force changes in healthcare reimbursement. Therefore we should be celebrating because the first half of the CBO’s prediction — healthcare costs will rise — has come true!

There are many many problems with this. The biggest is history. IPAB is not the first effort by the government to reign in healthcare spending. There is a whole alphabet soup of programs — RBRVS, GRH, SGR, etc. — that have completely failed in this regard. And that leads to the bigger point. Those of you who have followed the budget debates for the last twenty years know how this plays out: we get spending increases today with the promise of spending cuts tomorrow to balance them out. And those spending cuts never happen. Because tomorrow we are told that spending needs to go up because of the economy, the uninsured, the homeless or Venus being in Taurus.

So what will the Democrats and their apologists say when health care costs continue to rise? Well, besides blaming Republicans, I expect they will claim that this “proves” how much we need single-payer. To prepare for that, read McArdle today. Over the last twenty years, uber-controlled monopsony single-payer healthcare systems have restrained their spending growth to … about what we’ve had in the United States. The big growth in US healthcare spending occurred forty years ago and is now baked into the system. So … no, Virginia, socialized medicine will not cure what ails us.

Buckle your seat belts, friends. The ride’s only going to get bumpier.

College Health

How many times have I said it? When you outlaw cheap insurance, you create more uninsured:

Some colleges are dropping student health-insurance plans for the coming academic year and others are telling students to expect sharp premium increases because of a provision in the federal health law requiring plans to beef up coverage.

The demise of low-cost, low-benefit health plans for students is a consequence of the 2010 health-care overhaul. The law is intended to expand coverage to tens of millions of uninsured Americans, but it is also eliminating some insurance options.

Now the cheap insurance plans colleges offer aren’t great. They are available for about $100 a month or so and only cover the first $10,000 of medical bills. They won’t deal with a dramatic illness. But they do help some students deal with routine checkups, the occasional diagnostic test, the odd broken finger or whatever. But because Obamacare is phasing out lifetime caps on insurance, even these modest plans are either disappearing or seeing price hikes of 1000% or more. You can read more here from Avik Roy, who points out that these plans, while not perfect, fill a useful niche in the market.

What’s the Obama administration’s response to this carnage? Effectively it’s this: that people should pay more for insurance, because it’s for their own good. The costlier, more comprehensive plans offer more protection, and people should be forced to buy that extra protection, even if they think it exceeds their own needs.

In fact, that’s the entire Left Wing’s response to this. They point out that these plans cover only 7% of students, which is meaningless: it still means 600,000 people are being needlessly priced out of the market. They point out that Obamacare allows parents’ insurance to cover students under 26. But this almost meaningless since that was already the case through age 22; I was on my dad’s insurance until grad school. But in the end, it comes down to, “Well, they should get better insurance” as if the money for it is going to magically appear (more student loans, anyone?). And “better” insurance — defined as more expensive — isn’t always a great thing. Roy again:

It’s precisely the proliferation of overly generous insurance plans that causes runaway health costs in the first place. When you have a plan that covers everything, you tend not to be concerned with the cost-effectiveness of the care you receive. And that, in turn, leads to excess health spending, which in turn makes insurance costlier.

I personally would prefer students go in the opposite direction: get major medical, which would cover disasters with a very high deductible, therefore creating consumer pressure to publicize and compete on price. But that’s not in either party’s vision. In fact, the Arizona GOP just killed a law that that would require healthcare providers to publish price lists, creating precisely the kind of competition we need in the healthcare system.