President Donald Trump has recently twhreatened (that’s a threat communicated via Twitter) to stop payments of billions of dollars out of the federal treasury that have been going to insurance companies selling health insurance policies on the Exchanges created by the Affordable Care Act. Indeed, rumors are circulating that he may order a stop as early as tomorrow (August 1, 2017). Whether he does so this week, next week or next month, President Trump will be perfectly within his rights in stopping these illegal payments. It doesn’t matter whether these payments are “a good idea” or not or whether they actually save the federal government money.
In Part 1, we learned that real per capita health spending saw a 25-fold increase the 8 decades starting in 1929 even as real per capita GDP grew only 5-fold during the same period.
Whereas the previous post looked at cost trends in broad 20-year snapshots, today’s post looks at that extraordinary growth in health spending in much finer annual-level detail. Looking at real per growth has the advantage of removing general inflation so that we get a clearer picture of what’s going on, as well as telling us what is happening to the average U.S. resident.
With that in mind, I examined the difference in annual growth rates for real per capita health spending vs. all real non-health GDP per capita over the full period for which such data are available: 1929 to 2015. Doing the comparison in this fashion has the advantage of not letting the health sector’s ever-increasing size distort our picture of how much the rest of the economy is growing.
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With Republican repeal-and-replace efforts temporarily sidelined, now is a good time to step back and take a big picture view of exactly how we got into the mess we are now in regarding health care. What should be clear to people of all political persuasions is that Obamacare did not solve America’s health care woes.
If we take a long-term view (i.e., remembering that 90% of the nation’s population was uninsured back in 1940), the law has modestly reduced the number of uninsured. Most other promises made for the law were broken, most notably that a) if you like your plan, you can keep your plan (PolitiFact’s 2013 Lie of the Year); b) the law would lower premiums for the average family by $2,500 per year; c) the law would not add one dime to the deficit; and d) there would be no new taxes on the middle class. The jury is still out on another huge promise, but at this point I see no overwhelming evidence that the law has bent the cost curve as promised.
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Senate Republicans couldn’t agree on a way to repeal and replace Obamacare. So now they’re contemplating a totally different approach: Blow it up and let the states sort it out.
The latest attempt to resuscitate the GOP’s repeal bid would reshape the nation’s health care system by sharply curtailing the federal government’s role and placing the future of Obamacare in the hands of governors. But Republican senators will have a hard time overcoming the internal divisions that doomed their three attempts last week to unravel the Affordable Care Act.
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