Recent Decrease in National Health Expenditures Not Caused by ObamaCare

June 24, 2013

Over the past five years, while spending continues to grow, national health spending has grown at a slower rate than in the years prior. The Obama administration, naturally, is claiming that ObamaCare is responsible, even though the slowdown started before the president took office. However, there are two far more convincing reasons why health spending has slowed, says Avik Roy, a senior fellow at the Manhattan Institute.

The first is the Great Recession, which has slowed health spending around the world. When we think about the rate of growth in U.S. health care spending, the first thing we should always look at is our peer group in the industrialized world. The most common way to do this is to look at the data on health spending from the Organization for Economic Cooperation and Development (OECD). On an absolute basis, U.S. health spending has actually increased in 2010 and 2011, relative to 2009.

The second is that Americans are now much more responsible for their own health spending, a development that has made them more frugal.

  • According to a recent report from the Commonwealth Fund, which keys off of the government's Medical Expenditure Panel Survey, private health insurance deductibles have increased by 117 percent for single-person coverage and by 106 percent for family coverage, between 2003 and 2011.
  • For the average single-person plan, deductibles have gone up from $518 in 2003 to $1,123 in 2011.
  • For family plans, they've gone from $1,079 in 2003 to $2,220 in 2011.
  • In both cases, they've more than doubled over an eight-year timeframe.

Furthermore, in order to keep wages from going down, employers have been requiring workers to assume direct responsibility for more of their health insurance premiums. The fact that the employee share of employer-sponsored premiums has gone up by 74 percent, from $2,283 per family in 2003 to $3,962 in 2011 has also had an effect on consumer health spending.

The bottom line is that, as the cost of health care has continued to escalate, employers have been requiring workers to shoulder more of the responsibility for their own health spending. That trend, in turn, has led workers to be more frugal in how they spend their health dollars.

It's easy to waste other people's money. But when you're paying directly for care, especially in a challenging economy, you're going to be much more mindful of how you spend it.

Source: Avik Roy, "It's The Cost-Sharing, Stupid: Health Care Spending Is Slowing Because Americans Control More Of Their Health Dollars," Forbes, June 16, 2013.

 

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