The commission is using a 100-year-old law, the Clayton Antitrust Act of 1914, to challenge some of the mergers and acquisitions, and it has had remarkable success in recent cases.“Hospitals that face less competition charge substantially higher prices,” said Martin S. Gaynor, director of the F.T.C.’s bureau of economics, adding that the price increases could be “as high as 40 percent to 50 percent.”Leemore S. Dafny, a professor and health economist at Northwestern University who used to work at the commission, said, “The Affordable Care Act has unleashed a merger frenzy,” and she said she saw antitrust enforcement as a powerful tool to slow “the march toward conglomeration.”
The Medicare Trustees issued their annual report on the program’s long-term financing outlook last month, and their findings were greeted by the Obama administration as evidence that the Affordable Care Act is working. This is nonsense.
The general slowdown in health spending remains largely a phenomenon of economic conditions related to the deep recession of 2007-2009 and factors outside the realm of the ACA. Among other things, it is noteworthy that health spending growth rates have moderated across the developed world in recent years, as measured by the OECD. Even Obamacare’s most enthusiastic apologists might be sheepish about claiming the law somehow caused a global health transformation.
A close examination of the ACA’s provisions, especially those related to Medicare, also produces nothing that would lead one to expect large-scale spending moderation. The main provisions of the ACA provide substantial new subsidies for health insurance, through Medicaid and the federal and state exchanges. The Congressional Budget Office CBO estimates that these provisions will cost about $1.8 trillion over the period 2015 to 2024. The main effect of this massive increase in subsidization of insurance will be to increase demand for services and thus put upward pressure on prices and costs. This is simple economics. It may take some time for these pressures to emerge, but they will eventually emerge.
A new analysis from PricewaterhouseCoopers projects that average premiums for policies sold through Obamacare’s exchanges will increase 7.5 percent in 2015.In nearly one-third of the 29 states that PwC investigated, premiums will rise by double digits. In Indiana, the average increase will be 15.4 percent. In Kansas, it’s 13.6 percent. Florida’s insurance commissioner says premiums are set to climb 13.2 percent.
Health-information exchanges — not to be confused with health-insurance exchanges for purchasing coverage — are networks that allow patients’ records to be shared digitally among the providers caring for them. Through an HIE, emergency physicians could quickly access the medical history of a comatose accident victim, for example, or a specialist could review past test results and avoid ordering duplicates.
In 2009, the federal government allocated nearly $550 million in fiscal-stimulus funds to spur the development of HIEs in every state. More than 300 are in operation, including some run by state governments, some formed by hospital systems that share data only among their own affiliates and some public-private hybrids.
But dozens of HIEs have closed or consolidated amid funding and logistical woes, and experts say many more could struggle when federal funding ends this year. Previous efforts to create a statewide health-data network for California have foundered, though the state has some regional and local exchanges.
HealthCare.gov cost $840 million to build as of March, but the website still isn’t scheduled to be finished until December, according to congressional testimony.The Government Accountability Office will release a report Thursday detailing the Obama administration’s failure to manage HealthCare.gov, drastically increasing the price of the Obamacare website and leading to its breakdown last fall. RELATED: Report: Obama Admin Failures Caused HealthCare.gov Tech FlopGAO’s William T. Woods, director of acquisition and sourcing management, will testify to the House Energy and Commerce Thursday that the federal government had obligated a staggering $840 million by last March on building HealthCare.gov. The website is still not complete.
Medicare spending growth will be slow again in 2014 relative to historical standards, and some of the usual suspects are now crediting the Affordable Care Act — Obamacare — for the good news. For instance, a recent post at Vox suggests that the slowdown in Medicare spending can be attributed, in part, to the ACA’s provision penalizing hospitals for excessive readmissions of previously treated patients.
At the time of the ACA’s enactment in March 2010, the Congressional Budget Office estimated that the readmission provision would reduce Medicare spending by $0.3 billion in 2014, and only $7.1 billion over a decade. That’s about one tenth of 1 percent of total Medicare spending over that time period. There has been no information from any source since 2010 suggesting that the savings from the readmission provision has escalated into a major cost-cutting reform. In the context of overall Medicare spending, the readmissions provision is simply inconsequential.
But when it comes to health care spending, the picture is starting to look more global. After decades when health spending in the United States grew much faster than it did in other Western countries, a new pattern has emerged in the last two decades. And it has become particularly pronounced since the economic crisis. The rate of health cost growth has slowed substantially since 2000 in every high-income country, including the United States, Canada, Britain, France, Germany and Switzerland, according to data from the Organization for Economic Cooperation and Development.“We used to be different,” said Louise Sheiner, a senior fellow at the Brookings Institution and a former senior economist at the Federal Reserve. “Since about 1990, we’ve looked about the same.”Continue reading the main storyHealth Cost Growth, Slowing Around the WorldThe growth in health costs has slowed in the United States, but it has slowed in other countries, too.Annual growth in per–capita health care costs, 2001 and 2011+6%4%2%0%+5%CanadaFranceGermanyNetherlandsSwitzerlandBritain+1% – U.S.20012011Source: OECDThe synchronized slowdown offers reasons to be skeptical about neat explanations for the trends in any one country, be it local changes in medical practices or Obamacare’s various attempts to slow cost growth.