From Bloomberg News, Megan McArdle writes Obamacare Isn’t What’s Slowing Costs.
If health-care cost growth is slowing down because we’re working a lot of inefficiency out of the system, then the slowdown is obviously a big win for everyone except health-care providers and their shareholders. This explanation is a big favorite with the Barack Obama administration, which likes to credit the Affordable Care Act and related policies for the slowdown.
But health-care cost growth might be slowing down for other reasons. Innovation might be slowing down, in which case we’ve got good news and bad news. The good news is that we’ll be spending less on health care in the future. The bad news is that we won’t be getting so much in the way of new treatments.
Or the slowdown in cost growth might reflect broader growth trends in the economy. In that case, I’ve mostly got bad news: Health-care cost growth will be slower in the future. But so will economic growth. Health-care spending will be lower in the future, but so will revenue, meaning that we’ll be poorer — and we’ll still have a problem with the budget deficit. So this is pretty much lose-lose.
Which of these three things is the case?
Well, I think we can be pretty sure that public policy is not making the system more efficient, for two reasons. First, the decline started in the middle of the last decade, and there’s no plausible policy mechanism that would have caused cost growth to moderate just then. And second, the same broad trend shows up in pretty much every high-income country. No matter how smashing you think Obamacare was, it didn’t stabilize health-care spending in Switzerland.