One thing to keep in mind when reporting on growth in health care spending

Photo: GraphicStock

Photo: GraphicStock

The latest health care spending trends are out from the Medicare actuaries – and most reporters focused on how spending in 2014 ticked up after five years of slow growth (though the growth isn’t as rapid as some periods in the past). They raised questions about whether this harkens a return to the “runaway” growth of the late 1990s and early 2000s.

Jeff Young of the Huffington Post had a different take.

He saw the rising spending as completely predictable — and a sign that the health law is doing precisely what it’s supposed to be doing: Covering people.

“President Barack Obama and Democrats in Congress designed the Affordable Care Act to spend a lot of money to give more people health insurance so they could access medical care. The law seems to have succeeded on all three counts, and the results are showing up on America’s national health care tab,” he wrote. “… 8.7 million fewer people were uninsured last year, and the newly covered used their benefits to visit doctors, hospitals and pharmacies.”

His argument basically was that it was a relatively modest increase in spending given that we are covering millions more people. And with enrollment growth fairly modest in 2015 – and probably will be even more modest in 2016 (depending in part on whether additional states decide to expand Medicaid) the spending related to new coverage may modulate.

(Some of the spending increase last year, Young and many other reporters noted, was because of rising drug prices. That’s a whole other story – and not mostly attributable to health care reform.)

Young notes that the law isn’t only about coverage expansion. It contains many steps aimed at improving quality and efficiency in the health care system. And the annual CMS spending report doesn’t really say whether it is more efficient or how much:

“Health care companies, in part spurred by elements of the Affordable Care Act, are striving to constrain their costs in a way that could reduce future spending growth. Last year, the prices paid for things like hospital care, doctor visits and medicines rose a modest 1.8 percent – reflecting that increased spending is the result of more people using the health care system, not higher prices.”

Overall, spending rose 5.3 percent rise in 2014, after a 2.9 percent increase the prior year – the lowest on record since CMS actuaries began keeping track in 1960. During the prior five years, costs grew overall at a 3.7 percent rate – an unusually sedate pace.

Young also points out that analysis of last year’s spending doesn’t necessarily tell us all that much about what next year’s spending will be. Experts have been debating how much of the earlier slowdown in spending was a “hangover” from the recession, when people resisted spending on their health. There’s also the issue of how much is systemic – changes in the delivery of care and new payment models that “bend the curve.”

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