In the past few days, health care wonks have noted with some concern that after a period of years when total health care spending in America was slowing, it looks like it has begun to accelerate again. Republicans will probably begin to argue that this uptick is evidence that the Affordable Care Act has failed in one of its key goals, bringing down overall costs. But is this actually something to worry about?
With some important caveats I’ll explain in a moment, the answer is no. In fact, in some ways it’s a reason to celebrate.
We have to keep reminding ourselves that the main reason we had to reform health care in the first place was that our system was morally abominable. We were the only industrialized country in the world that tolerated millions of its citizens having no health insurance. But since the ACA passed, lots of Americans now have coverage who didn’t before, and many who had bare-bones plans that would pay only for catastrophic care now have much more comprehensive coverage. And many of them will be using health care. Which isn’t free.
As much as we worry about rising costs, health care spending does buy us important things. When a 50-year-old man has a heart attack and gets double bypass surgery, a lot of money has been spent. But that money may have bought him 30 more years of life, during which he’ll be economically productive, participate in the life of his community, impart wisdom to his grandchildren, and do a whole bunch of other wonderful things. He may even end up living long enough to get a whole raft of illnesses in his old age, and ultimately spend a couple of years in a nursing home. Also not free.
At a fundamental level, spending more on health care isn’t bad if we actually get something for it. And if what we’re getting is a lot of people getting care for conditions they’d been putting off going to a doctor to get checked out, then that’s a measure of success.
Now, it’s important to note that that no one can attribute the increase in total spending in the last few months just to one particular cause; we don’t know how much of it is coming from previously uninsured people getting care. (See Jonathan Cohn’s lengthy and informative analysis of this issue.) But we knew this was going to happen, because you can’t bring millions of people into the system without spending more money.
Nevertheless, the overall spending problem we have actually isn’t a function of how many people we’re covering. Rather, it’s a function of the fact that pretty much everything in our health care system costs more than everywhere else. Every other industrialized country manages to cover all their citizens for far less money than we spend, often with better results. We pay more for drugs, we pay more for devices, we pay more for procedures, we pay more because our health care bureaucracies are less efficient than in other countries — everywhere you look, we spend as though we’re getting a health care Rolls Royce, when what we actually get is more like a Camry, or in some cases even a Ford Pinto.
There were many provisions in the ACA that were intended to “bend the curve” on those costs, some of which will inevitably have a greater impact than others. And there are some components of our high costs that the ACA didn’t touch. But all of that will play out over the long term — not a matter of months, but of years and even decades. The people who run and care about our health care system should pay close attention to where costs move in the short term, so we can get insight into what’s working and what isn’t, and see where adjustments might be made. But people who tells you that health care spending rising a few percentage points this year means that the Affordable Care Act has failed don’t know what they’re talking about or are trying to hoodwink you.