Health Care Spending Is Slowing Down and It Doesn't Matter Whether Obamacare Is the Cause

Moneybox
A blog about business and economics.
Jan. 8 2014 10:57 AM

It Doesn't Matter Whether Obamacare Is Causing the Health Spending Slowdown  

458901783
We can afford it.

Photo by Joe Raedle/Getty Images

Health care spending growth is slowing down. It started slowing down a bit before the passage of the Affordable Care Act, and then it slowed down even more after the ACA was signed into law. As implementation began, we last year for the first time in a long time saw health care spending rise more slowly than overall GDP.

This has set off a pundit war over the question of whether the Affordable Care Act is the cause of the slowdown. Watch the witty Jonathan Chait slice-and-dice Conn Carroll if you're interested in that kind of thing.

But in important ways, this doesn't matter.

Advertisement

Here's the basic shape of the puzzle. The framers of Obamacare felt that there were two big problems in the United States health care system as it existed in 2008. One problem was that many millions of Americans were locked outside the health insurance system. Another problem was that health care spending was increasing at an unsustainable rate. For ethical reasons they wanted to address the former problem. But the most direct means of addressing the coverage problem would naturally tend to increase the rate of health care spending. That's why the basic coverage provisions were paired with a whole bunch of politically contentious cost control measures. For coverage expansion to work—both politically and financially—it had to be paired with a slowdown in health care spending growth.

And guess what? Health care spending growth is slowing down.

Is it slowing down because of the reforms? I think there's a strong case that, yes, the reforms are playing an important role. But in a sense it doesn't matter. The point of the cost control provisions was to put the health care system on a more sustainable course. If it happens to be the case that through some grand coincidence the health care system lands on a more sustainable course at the exact same time the Affordable Care Act is being implemented, then that works too. The point is that one major concern people had about Obama's coverage expansion is that it would exacerbate an unsustainable health care spending explosion. Had that proved to be the case, it would have been a huge problem for the coverage expansion. But in fact, spending growth is slowing. So the problem doesn't exist. I think the "coincidence theory" strains credulity but even if it's true, the win is there anyway.

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

  Slate Plus
Slate Picks
Dec. 19 2014 4:15 PM What Happened at Slate This Week? Staff writer Lily Hay Newman shares what stories intrigued her at the magazine this week.