Health Reform Is Working

Moneybox
A blog about business and economics.
April 18 2012 8:49 AM

The Health Care Cost Curve Is Bending

Peter Orszag writes that, on the ground, the rate of increase in health care spending is slowing as diverse sets of providers have started to look more closely at how to reduce unnecessary treatments. He contrasts this practical progress with the ongoing flow of nonsense about health care from the D.C. political debate, but I think there's a false modesty here that also sells his former colleagues still in government short. What we're seeing here on the ground is that all the Orszag-inspired emphasis on "bending the curve" that made its way into the Affordable Care Act does seem to be making a difference and whether it continues to make a difference will in part be a function of whether credit where due comes to pass.

One question I do have about all this is whether a war on health care waste will actually reduce health care spending over the long run. Clearly in the short-term if you cut out unnecessary procedures you decrease spending. But over the long term it seems to me that if we increase the efficacy of the marginal American health care dollar that this is going to make people want more health care not less. When I had a bike accident a couple of years ago and bruised myself in several places, I didn't seek treatment precisely because I knew doing so would be costly and pointless. I just gritted it out through a few days of intense soreness and weeks of lingering sporadic soreness in my left wrist. Had it been possible to obtain a speedy and effective treatment for the injuries, however, I would have wanted it and in fact would have paid a lot of money for it.

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Discussing this with some smart folks off line, some look at America's combination of high health care spending and poor health outcomes and say that's crazy talk. But I think that what the international data are telling us is that obtaining health care services is not a cost-effective means of obtaining good health outcomes. Socioeconomic and lifestyle factors outside the "health care" sector are the biggest drivers of mortality, life expectancy, and other gross health outcomes. That doesn't change the fact that when people are ailing they'd like to get some health care services, and if the health care services are good they're even more likely to want them.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.