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Notes From the Fieldby Martin Weil

May 18, 2015

Healthcare Costs Are Coming Under Control

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Annual percentage change in US healthcare costs.

Whether you love or hate Obamacare, it does seem to be a factor in the decline in national healthcare, costs which have been long recognized as the major threat to US solvency.

With slowly growing prices, even rising demand for healthcare has led to less-than-projected spending, in just about every category. (To be clear: This doesn’t mean healthcare is getting cheaper; it means healthcare is getting more expensive slower than we anticipated.) The government is casually saving hundreds of billions of dollars in Medicare thanks to both direct cuts and other reforms. Insurance companies, despite a rough year due to the arrival of some expensive new drugs, have been spending less than the actuaries projected in 2010. Even with growth in high-deductible plans, out-of-pocket spending is actually coming in below projections from five years ago.

Forecasts of medical spending have undergone round after round of major surgery. Six years ago, the Urban Institute projected that the country would spend $23 trillion between 2014 and 2019. After Obamacare became law, it raised its forecast by half-a-trillion dollars. But the latest projections, published this month, are lighter by $2 trillion and $2.5 trillion, respectively.

From The Atlantic

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