The Health-Care Spending Claim That Made Obamacare Possible Was a Lie

Health care costs were slowing before the passage of Obamacare.

One of the key arguments that President Obama used to get his health care law though Congress, control of soaring health care costs, turns out to have been bogus.

Here is the way Obama put the argument in a September 9, 2009, speech about health care to a joint session of Congress:

Then there’s the problem of rising cost....insurance premiums have gone up three times faster than wages....our health care system is placing an unsustainable burden on taxpayers.  When health care costs grow at the rate they have, it puts greater pressure on programs like Medicare and Medicaid. If we do nothing to slow these skyrocketing costs, we will eventually be spending more on Medicare and Medicaid than every other government program combined....

Now, these are the facts. Nobody disputes them.  

Obama’s voice saying “these are the facts. Nobody disputes them,” is almost enough to set off sound effects akin to those that accompany Pinocchio’s growing nose in the Disney movie.

Sure enough, now that the data are in, the emerging consensus is that health care costs, rather than “skyrocketing,” have been moderating, even flat-lining. And they were beginning to do so well before Congress passed ObamaCare in March 2010.

There have been a trickling of academic papers and journal articles tracking the trend, but the news hasn’t really yet made it fully into the political discussion.

A January 2012 article in the journal Health Affairs reported that “U.S. health spending grew more slowly in 2009 and 2010—at rates of 3.8 percent and 3.9 percent, respectively—than in any other years during the fifty-one-year history of the National Health Expenditure Accounts.” That article, by economists and statisticians who work for the Centers for Medicare and Medicaid Services, says, rather than controlling costs, ObamaCare actually increased health spending by one or two tenths of a percentage point in 2010. Overall, though, the law’s effect in 2010 was less important than were things like “the loss of patent protection for certain brand-name drugs” and “a continuing increase in the use of generic medications,” i.e., those $4 generics at Walmart.

"Slower Growth In Medicare Spending—Is This the New Normal?” was the headline on one article published in March 2012 in the New England Journal of Medicine. That discussed a series of factors. The economic downturn meant some hospitals delayed or canceled construction projects because of “tight credit markets and shrinking endowments.” Demographically, the Baby Boomers just becoming eligible for Medicare are “young elderly” who tend to be healthier and require less costly care. This article also mentions two Bush-era laws: “The Deficit Reduction Act of 2005 reduced payment rates for imaging, home health services, and durable medical equipment, and the Medicare Improvements for Patients and Providers Act of 2008 made substantial cuts to Medicare Advantage plans.”

Another New England Journal of Medicine article, from August 2, 2012, reported what it called a “marked slowdown in spending growth.” That article says that “Between 2000 and 2005, Medicare spending per enrollee grew about 7.2% annually, as compared with 9.1% growth among private payers. Between 2006 and 2010, however, growth in Medicare spending per enrollee slowed to 4.2% annually, as compared with 4.5% among private payers.” The article says growth of Medicaid spending per enrollee “was relatively slow (less than 3% per year) throughout the past decade.” Among the causes, the authors speculate, were “lower growth rates for prescription-drug spending” in part because of “the increased substitution of generics for brand-name drugs.”

According to the National Health Expenditure Accounts maintained by the Department of Health and Human Services, health care spending was about 14 percent of GDP from 1997 to 2001, then grew to about 16 percent from 2003 to 2007. In 2009 and 2010 it was at 17.9 percent. After just about doubling to $2.4 trillion from $1.2 trillion in the decade between 1998 and 2008, health care spending was about $2.5 trillion in 2009 and about $2.6 trillion in 2010.

The man who was President Obama’s White House budget director, Peter Orszag, weighed in last week from his new perch in the private sector with a column acknowledging that “The rising cost of health care in the U.S. has been slowing over the past few years.”

“Slowing,” not “skyrocketing,” got that? Now he tells us. In an email to me, Orszag tried to credit both President Obama’s stimulus spending on electronic health records and the ObamaCare law for the slowdown. But his timing and his logic are both off base.

Republicans who opposed ObamaCare in the first place can use these new facts as part of an argument for repeal. The “skyrocketing” costs that the president used to sell the law were already slowing without the new law. But in pushing their own health-care reform agenda to replace ObamaCare, Republicans will have to be careful not to repeat the president’s mistake. Even markets with huge government involvement, like health care in America, sometimes have ways of self-correcting.

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  • Hyperion||

    ....our health care system is placing an unsustainable burden on taxpayers

    And that is something that dear leader is concerned about? What a laugh. One of his most desired goals is to do exactly that.

  • Hugh Akston||

    His goal is to create an unsustainable burden on some taxpayers. He also wants to create permanent constituencies of state-supported poor and highly subsidized middle class people. He also wants to buy the support of certain wealthy people and korporations by giving them sweetheart tax status, subsidized loans, and in some rare cases, by forcing Americans to buy their products.

    The only people he wants to create an unsustainable burden on is rich people who won't play ball, and taxpayers who haven't been born yet.

  • Hyperion||

    He also wants to buy the support of certain wealthy people and korporations by giving them sweetheart tax status, subsidized loans, and in some rare cases, by forcing Americans to buy their products

    Yeah, this is a very worrisome trend, since more green bankruptcies will not look very good for the one, and I really wasn't planning on buying a windmill next year.

  • Auric Demonocles||

    Nope, this will be used as proof that Obamacare worked.

  • Pro Libertate||

    Everything is proof that he's the greatest president ever in all possible worlds my God he's glorious please don't let that awful corporation Mormon win.

  • Hugh Akston||

    please don't let that awful corporation Mormon win

    I can't stop laughing at this.

  • Pro Libertate||

    Corporation Mormon bad, eats more chicken. Vote Obama.

  • ||

    Mittens likes spicy chicken!

  • Pro Libertate||

    Wait a second. Wait a second. "Eat Mor Chikin." Could the "Mor" be short for Mormon? Holy cow!

  • ||

    When I saw "Mor Chikin" it looked like "Monchichi" to me for a second, so this is obviously racist.

  • Hyperion||

    He eats at Chick-Fil-A. Burns the evil capitalist Mormon devil! He hates the gay folk, and the children!

  • Pro Libertate||

    I feel I have total understanding of what's going on now. Chick-fil-A and Romney are one and the same.

  • Hyperion||

    Yes, and if the Romulan is elected, da childins will be force fed chicken from Chick-fil-A, and the streets will run red with their blood.

  • Pro Libertate||

    So this whole election comes down to beef or chicken.

  • The Hammer||

    Stop that. I like both beef and chicken, and will not have their names sullied by comparison to those two scumbags.

  • Pro Libertate||

    Well, there is an alternative. Fish. That's Gary Johnson.

  • ThatSkepticGuy||

    "So this whole election comes down to beef or chicken."

    That certainly seems to be the thesis of Obama's olympic ads, wherein he instructs us that we have a choice to make between Good or Evil, with himself playing the part of the Sacrosanct, and absolutely no other possible conceivable alternatives.

  • Matrix||

    He could kill every unemployed person in America and then claim he solved the unemployment crisis. The Left would praise him as g-d regardless.

  • Hyperion||

    I have said it before, but I never get tired of saying it. If he went on live TV, bit the heads off of live kitties, and proclaimed he was making a sacrifice to Beelzebub, the left would praise him.

    They never get tired of praising him. They even like to put pictures of him on magazine covers with a rainbow colored halo over his head. You can't make up stuff that creepy, and stupid.

  • Copernicus||

    Pro Libertate| 8.6.12 @ 4:58PM |#
    Everything is proof that he's the greatest president ever in all possible worlds my God he's glorious please don't let that awful corporation Mormon win.
    ________________________

    Let us Pray:
    Oh Obama, oooh you are so big
    So absolutely huge
    Gosh, we're all really impressed down here I can tell you.
    Forgive us Obama, for this our dreadful toadying
    But you're so strong and just so, well, SUPER
    (Congregation: "Fantastic")
    Amen

  • Mo||

    Wage growth and general spending growth was pretty abysmal in 2009 and 2010. How did health care spend growth compare to wage growth and overall spend growth during that time period? The higher unemployment rate would lead to lower percentage of people covered and people delaying non-urgent medical care. Getting the context of those numbers and how they compare to the rest of the economy is more illuminating than the numbers in a vacuum. For example, health care spend going up 9% with wages growing at 12% is a lot better than health care spend growing at 3% in an economy with wages growing at 1%.

  • ||

    The higher unemployment rate would lead to lower percentage of people covered and people delaying non-urgent medical care.

    Why is that a problem for me?

  • Mo||

    It's not a problem for you, but it's could indicate that lower spending is due to the economic downturn rather than health care costs moderating.

  • IKindaAgree||

    Because you live in a thing called a "society," as opposed to the pre-modern, kinship-based tribal arrangement you'd presumably have us return to.

  • Sevo||

    IKindaAgree| 8.6.12 @ 9:36PM |#
    "Because you live in a thing called a "society," as opposed to the pre-modern, kinship-based tribal arrangement you'd presumably have us return to."

    Uh,oh. Infant playing with straw men.

  • ThatSkepticGuy||

    "Because you live in a thing called a "society," as opposed to the pre-modern, kinship-based tribal arrangement you'd presumably have us return to."

    "Do you breathe oxygen? You didn't build that; you owe your continued existence to the government because herp derp "Social Contract", that's why."

  • wef||

    So, it turns out that a dorm-room bullshit artist was bullshitting.

    The servile types don't care. It fact, he is the master of the noble lie.

    And he's still going to get re-elected.

  • Harvard||

    He is indeed and it may not be even close.

    I took delivery on three new-in-box Colt M-4's at an attractive price. They've had a good spike in appreciation after Aurora but nothing like the days/weeks after Nov. 3 will bring. The new hedge fund?

  • Almanian's Evil Twin||

    In John M. Browning We Trust

  • BakedPenguin||

    Used guns are a great store of value. Plus, if you buy them, you have guns.

  • Hyperion||

    In my observation of the polls, and I look at the polls occasionally, the annointed one has never been behind, is still ahead, and there seems to be nothing he can do to lose. I bet he could even tell business owners that they didn't build their own business, and he would still win.

  • R C Dean||

    The polls are mostly crap, because they oversample Democrats. In some cases to a ludicrous degree.

  • Apple||

    Picture looks familiar. Where have I seen it before?

  • IKindaAgree||

    Great job nailing Obama for making statements based on the facts he had available at the time, as opposed to the ones available three years later!

  • R C Dean||

    Health care is still part of the economy. Giving growth figures out of context is Not Helpful.

    What has health care cost growth done in previous recessions? If health care cost growth moderates during recessions (and I'm pretty sure it does), then I would say we aren't out of the woods, unless your plan is to throw the baby of health care costs out with the bathwater of the economy.

    The key metric here isn't growth per se. Its the degree to which health care cost growth exceeds (a) real economic growth and (b) goverment revenue growth.

    What's that metric look like?

  • R C Dean||

    Look at it this way:

    If health care costs consistently grow at around 3 - 4% more than the economy/government revenue, then we're fucked. At that rate, they will double their costs relative to the economy or double their share of the budget every 20 years.

    Does that sound sustainable to you?

  • Romulus Augustus||

    OK, why the gun buying spurt? Several friends are loading up - to fight off looters they say. But aren't the looters going to be appeased - at least for the next four years? Or by "looters" do they mean government agents and are actually going to shoot them
    (or is this just chestpounding)?

  • Harvard||

    As I said, my hedge fund. I bought the three black rifles as a pure investment on the strong possibility this pud is reelected. With what I already own Lord knows I don't need anymore, but I caught a deal on the Colt's, NIB for under a grand apiece and tried for six but only got the three. Like money in the bank. The Mormon wins and I can sell for a meager profit. Shitbird wins and it's likely a 50% profit, and the knowledge that you've put three more government agent neutralizers in play.

  • TengaDun||

    No surprise there, lying is what politicians do best lol.

    www.Goin-Private.tk

  • Jackand Ace||

    Gee, Ira. Great article. You sing the praises of cost leveling for government run programs such as Medicare and Medicaid. And then you sing the praises of further government intervention through Bush passed legislative efforts. And then you fail to mention that Obamacare further cuts Medicare, something Romney continually reminds us about.

    So Medicare grew at 7.2% and private plans at 9.1%. Government run health continues to be more efficient, right? That is your point, I take it. And even after greater gains were in the government run programs.

    But only you, Ira, could take a couple years of data and say that trumps decades of calamitous rising health care costs. What an article.

  • electedface||

    Big corporations which have been given first amendment rights by the supreme court to make unlimited contributions to political candidates and elected officials, have saturated the media to make the American people believe that it’s bad for them to have the same health care benefits enjoyed by members of congress, supreme court, and the establishment. It just so happens big corporations and the establishment largely control which elected officials receive political contributions donated by big business under the guise of freedom of speech.

    In other words, working men and women have been lead to believe that good health care for them is bad and that 34 million people should not have affordable health care.

    http://www.youtube.com/watch?v=hNSGQ-J2vsI

  • Sevo||

    electedface| 8.7.12 @ 11:25AM |#
    "Big corporations which have been given first amendment rights by the supreme court..."

    Idiot.

  • ThatSkepticGuy||

    "Big corporations which have been given first amendment rights by the supreme court to make unlimited contributions to political candidates and elected officials, have saturated the media to make the American people believe "

    Sounds more like you're just one of those Galbraith/Chomsky types who rationalize any facts or public opinion that doesn't correspond with yours by fantasizing about corporate boogeymen utilizing mind control.

  • The Knuckle||

    Are unions people with the right to spend unlimited amounts of money to elect the people who will pay them?

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