More News on Cost and Health Reform

By on January 8, 2013

costsHere’s the good news and bad about the state of American health care entering the new year. According to an article published in the important journal Health Affairs, medical costs have plateaued for the third year running. Overall spending stands at 2.7 trillion dollars, or 17.9 percent of the over-all economy. This is about the size of the overall economy of France and far more than any other nation spends on its medical care.

increaseNone the less the 3.9% growth is near inflation and represents a third year low for health cost growth, according to the Department of Health and Human Services. One may debate the impact the recession and high unemployment has had on that figure, but over all this is good news. During this period, medicaid costs were relatively flat though Medicare costs went up as more baby-boomers enter the senior phase of their lives.  It may be too soon to assess the effects of Obamacare (PPACA) on all this. More young people 24 to 26 are being covered, but these are not high-utilizers historically.

CosThat’s the good news. The bad is that insurance companies are announcing record increases in rates across the country for 2014. This is of course the year the PPACA takes full effect. State insurance exchanges are to be in place by year’s end. Are they anticipating reduced returns on their investments or just taking advantage of the opportunity to increase profits one more time? Some states like New York will have the ability to push back against these increases. Others like California where Anthem-Blue Cross has announced a 26 percent increase can only threaten and jawbone.

timeIf insurance company profits hit record levels in 2014, it will likely increase the push for a single-payer system as insurance companies are basically middlemen in the health care system. Everyone is watching. The US debt situation and financing the government has not been decided. That floor show hits in March. More people will be qualifying for Medicare. Big ticket campaign contributors will be muddying the waters of reform. Stay tuned for more fireworks and political song-and-dance in Congress.


Tom Godfrey MD

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