This week, Jason Furman, head of the President’s council of economic advisers, penned a piece in the Wall Street Journal entitled “Obamacare is slowing health inflation” in which he pointed to an annual report on health care spending from the Office of the Actuary at the Centers for Medicare & Medicaid Services (CMS) to show that Obamacare has helped slow or reduce health costs.
The problem is the report does not say what Furman suggests it says. In fact, the report actually acknowledged that the main driver of the temporary slowdown in the rate of health care growth was not Obamacare, but an economy shaken by the Great Recession. Since World War II, the historical pattern is that the annual increase in the rate of health care spending slows a bit during periods of economic turmoil or recession, as consumers lose their health coverage or have fewer dollars to spend on care.
In a comprehensive study on this phenomenon, the Kaiser Family Foundation used statistical analysis to examine 50 years of health spending and economic trends. The study found that the economy produces a major but delayed effect on the nation’s health spending, and attributes 77 percent of the slowdown due to poor economic conditions. In other words, the economy is not a factor, but the factor.
The CMS report itself underscored that the slower-than-average annual growth in health care spending was attributable to a weak economy. “The relative stability since 2009 primarily reflects the lagged impacts of the recent severe economic recession,” the report explained. Because millions of individuals lost their employer-provided health insurance or could not afford to keep their health coverage, “there was a slow recovery from private health insurance enrollment losses that occurred in 2008-2010” the analysts concluded.