Health Care Crowd Out

Today’s Managing Health Care Costs Indicator is

$30 billion

Peter Orszag, most recently the head of Obama's Office of Management and Budget, has a column in today's New York Times  demonstrating that increasing costs of health care have a substantial impact on other social priorities.

He reports research that shows that in 1985 states spent 50% more on higher education than on Medicaid, and the ratio has now flipped. During this time period, 43 states have cut their support for higher education, and salaries for academics at public universities have slide well behind those at private universities.   Public universities represented 40% of the top ranked colleges a quarter century ago.  Now, they represent 12%.

If state colleges and universities were being supported at the rate they were supported in 1985, higher education would be getting $30 billion more in state aid a year ($2000 per student.)

Orszag concludes that controlling health care costs might be the best way to improve post-secondary education in America.

Read More

Census Data: Government Role in Health Insurance Grew in 2009

Click to enlarge

Today’s Managing Health Care Costs Indicator is 50.7 million

The census report came out yesterday, showing a distressing increase in the number of Americans without health insurance in 2009.  There were50.7 million uninsured Americans in 2009, 15% of the population.  The decrease in employer-based health insurance is even steeper than it appears, since the number of Americans on government insurance (Medicare, Medicaid and military) has grown sharply. The total number of insured Americans declined for the first decline since 1987, even while 5.7 million more Americans were on government insurance programs. 

These numbers understate the magnitude of the transition in health insurance.  For one thing, those who have insurance are likely to have less coverage than in previous years.  Those with $1000 or greater annual deductibles doubled in the last year.  Also, the census category  of “government sponsored” insurance doesn’t include government employees.   There are 2.5 million full time federal employees  3.8 million full time state employees  11.0 million full time local government employees   Assuming that the full time governmental employees get their insurance from their employer, and that no part time employees get governmental insurance, the percentage of those with governmental insurance goes up from 28% to 33%.  And that’s not counting another government health care expense -- the tax subsidy for employer-based health insurance, valued at $200 billion per year. Finally, last year those who had lost jobs were eligible for subsidies to purchase insurance (COBRA); these subsidies have since expired.  

The rise in the uninsured makes controlling health care inflation even more important.  Rising health care costs are directly associated with the rise in the number of uninsured.   Support for health care reform in the US has declined .  Support for universal health insurance could collapse altogether if we don’t rein in health care cost increases.  

Read More

Health Care Reform Will Lower Long Term Medical Costs

Click to enlarge

This image from The Washington Post

There has been a lot of blathering about how the new estimates from the CMS actuary show that health care reform will increase the cost of health care.   In fact, the Wall Street Journal's headline is "Health Outlays Still Rising".

Here's the commentary in the WSJ:

The report by federal number-crunchers casts fresh doubt on Democrats' argument that the health-care law would curb the sharp increase in costs over the long term, the second setback this week for one of the party's biggest legislative achievements.


The graphic above is from a pithy post by Ezra Klein of the Washington Post, who points out that there is a cost spike from providing subsidies to cover 10% of the population.  It's striking that in the out years (and that's what counts), the costs are lower under health care reform even with the near-universal coverage.


The costs are lower because of diminished provider payments, which will extend the life of the Medicare trust fund, as well as make it possible to cover most of the currently uninsured while lowering the federal deficit.    The reform bill is far from perfect - but is looking like a very good deal indeed. 

Read More