James Capretta explores for National Review Online readers the Affordable Care Act’s impact on American health care costs.
David Leonhardt of the New York Times has offered up a misleading defense of the Affordable Care Act (ACA) — i.e., Obamacare. Like several others, he celebrates the slowdown in health-care-cost escalation and suggests that the ACA is one reason for the deceleration. Specifically, he suggests that key ACA provisions — which he describes as nudging “the health care system away from paying for the quantity of medical care rather than the quality” — have already played a role in making the health system better and more efficient.
It would be an effective argument for the ACA if it were true. Unfortunately, it isn’t.
Leonhardt is responding to the recent government announcement that national health spending rose 3.6 percent in 2013. That’s certainly a low growth rate — well below the long-term trend over the past several decades. But it isn’t a trend that began with passage of the ACA.
In 2001, national health spending rose 8.5 percent. The following year it rose 9.6 percent. But then the annual growth rate began to drop, and by 2008 health spending was rising just 4.8 percent. Put another way, the growth rate of national health spending was cut in half during the time of the Bush presidency. Did the ACA cause this?
In the first two years of the Obama administration, health spending growth remained moderate. In 2009, health spending rose just 3.8 percent, and in 2010 it rose 3.9 percent. The ACA wasn’t enacted until March 2010.
The primary explanation for the slowdown in recent years is the deep recession of 2007 to 2009 and the slow recovery that followed it. The government’s top actuaries and economists have repeatedly made this point when presenting the official data and forecasts. Indeed, the slowdown in health spending in recent years is consistent with the observed relationship between national health spending and the state of the economy over the past half-century.
