Wednesday, September 25, 2013

Obamacare Bends the Cost Curve—Upward

Back in 2008, three eminent Harvard economists who were advising the Obama campaign—David Cutler, David Blumenthal, and Jeffrey Liebman—wrote a memo claiming that Senator Obama’s health-care plan could reduce national health spending by $200 billion a year. As Kevin Sack recounted in the New York Times, the authors of that memo then took that figure, “divided [it] by the country’s population, multiplied for a family of four, and rounded down slightly to a number that was easy to grasp: $2,500.”

Mr. Obama then took that number on the campaign trail, insisting that his health plan would “lower your premiums by up to $2,500 per family per year.”

Last week, the Obama administration’s Centers for Medicare and Medicaid Services issued a rather different prediction: that “the [Affordable Care Act] is projected to . . . increase cumulative spending by roughly $621 billion” from 2014 to 2022. To be clear, that’s spending on top of the normal health-care inflation that would have happened if Obamacare had not been passed. So much for “bending down the cost curve,” as the president often liked to say his law would do.

Yesterday, over at my Forbes blog, my colleague Chris Conover paid tribute to those three Harvard economists and their favored president, by employing the same arithmetic they did to calculate how much more Americans would spend on health care due to Obamacare. He took the $621 billion, divided by the U.S. population, and multiplied by four.

“Simplistic?” Chris asked. “Maybe, but so too was the President’s campaign promise. And this approach allows us to see just how badly that promise fell short of the mark. Between 2014 and 2022, the increase in national health spending (which the Medicare actuaries specifically attribute to the law) amounts to $7,450 per family of 4.”

Full article: http://www.nationalr … urve-upward-avik-roy

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