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The natural progress of things is for liberty to yield and government to gain ground. —THOMAS JEFFERSON, 1788

Health care costs rising fast, but will go back down because of Obamacare

Jonathan Cohn, TNR

[Ed. - Read the whole thing closely.  It turns out people are NOT using more health care now.  Costs are just going up.  So the article's premise is inherently a bait-and-switch argument.]

You can see it in the latest monthly reports from the Altarum Institute, an Ann Arbor-based think-tank that monitors national health care spending. These reports, based on government data, are the equivalent of an early warning system for medical costs. They are one of the first places a spending spike would show up. According to Altarum, expenditures started to rise more quickly in the middle of 2013. Since then, the rate has gone up even more. Reports of rising costs have already gotten the attention of savvy health care observers in the media, like Philip Klein and Sarah Kliff. The question now is how long the trend will continue, how quickly spending and, of course, what it means for Obamacare. …

Health care spending will acclerate for a little while, partly because of Obamacare’s coverage expansion but mostly because of the economic recovery. Then it will subside. It will, in other words, be like a wave: Spending will go up, crest, and then return to a lower level.

The good news is that, once the wave is done, year-to-year increases in health care spending should be significantly lower than the historical average. Economists like to talk about “excess growth”—that’s the difference between how quickly health care costs are rising and how fast the economy, measured as Gross Domestic Product, is growing. Over the last 50 years, excess growth has been about 2.6 percent. But the average in the last 20 years has been down to 1.6 percent, thanks to structural changes, some of which date back to the 1990s when insurers first started using managed care. There’s every reason to think that, once the economy fully recovers and Obamacare’s expansion is in place, health care spending will be back to rising at something like the level it was before.

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