In 2009 a youthful Barack Obama addressed a joint session of congress on health care on a cold fall evening. The country was still recovering from the great financial crisis, and the new President was now attempting to turn the nation’s eye to health care. As he had done many times before, Obama spoke powerfully of the tragedy of millions of citizens with ‘no access’ to health care, but spoke practically of the unsustainable and untenable economics of health care.
“Finally, our health care system is placing an unsustainable burden on taxpayers. When health care costs grow at the rate they have, it puts greater pressure on programs like Medicare and Medicaid. If we do nothing to slow these skyrocketing costs, we will eventually be spending more on Medicare and Medicaid than every other government program combined. Put simply, our health care problem is our deficit problem. Nothing else even comes close. Nothing else. (Applause.)
Now, these are the facts. Nobody disputes them. We know we must reform this system. The question is how. “
These were the indisputable facts, he said. ‘Nobody disputes them’.
With this argument the groundwork was set to completely change healthcare as we knew it. What choice did we have, after all? We we were all heading off of a cliff unless something was done. And something had to be done right now. The only problem was that we actually weren’t rushing off of some fiscal health care cliff in 2009. We were actually in the throes of a great inexplicable slow down in health care spending that extended back to 2001. The years from 2009 to 2013 actually represent the slowest growth in healthcare spending… ever. Annual growth rates that at one point had averaged almost 11% in 1989, barely broke the 4% mark between 2009 and 2013. Even more importantly, annual health care costs were rising slightly slower than the annual increase in GDP, and so, for a brief period in time, the health care piece of the national pie actually did not increase.
That was until 2014 when the Affordable Care Act started enrolling patients. Directly as a result of the ACA (CMS conclusions – not mine), the annual growth rate in health expenditures went from 2.9% in 2013 to 5.3% in 2014. CMS recently released the 2015 numbers, and they are worse. Annual spending on health went up to 5.8% in 2015, and continued to outpace GDP growth (Figure 1). Healthcare costs are, once again, on the rise and are clearly accelerating.
Figure 1. National Health Expenditure growth rate
The very program instituted to solve the problem of cost, succeeded in bending up the national health care cost curve. Some choose to debate this point, but the data here is clear. Federal Health expenditures in 2014 and 2015 increased dramatically relative to all other expenditures. (Figure 2). It could certainly be coincidence that federal expenditures rose rapidly the same year millions of Americans gained health care coverage, but I doubt it.
Figure 2. National Health Expenditures by Sponsor
Politics being politics, the most transparent administration in history said this about this data dump from CMS.
The Obama legacy is not going to just be coverage; it's also controlling costs. https://t.co/tlI6vFv4WB
— Andy Slavitt (@ASlavitt) December 2, 2016
Andy Slavitt, the director of CMS, is technically correct because he’s picked out per-enrollee Medicare spending which continues to increase at historically low levels (1.7% in 2015). Conveniently ignored is annual growth in private health insurance cost (7.2%) that is almost double the rate of growth in 2009, and growth in Medicaid – both expanding dramatically after 2014 due to expanded enrollment with Obamacare. The expansion in Medicaid does not come cheap. In 2015 Medicaid accounts for $545 billion in spending and grew at an alarming 11.6% in 2014, slowing down only slightly to 9.7% in 2015. (Table 1)
For all this, the uninsured share of the population dropped by a whopping 5%. About half of the coverage came via the private marketplace, and the other half came via Medicaid expansion. While there is no doubt that some benefited greatly – specifically those uninsured with pre-existing medical conditions – millions of citizens found themselves paying a pretty penny for insurance that was expensive to use. Total out-of-pocket spending for individuals which includes co-pays, deductibles, co-insurance and spending on non-covered services reached an otherworldly 338 billion dollars as more citizens were guided to plans with greater cost ‘sharing’. While it is unfair to compare spending in developing countries for a variety of reasons, it provides some measure of scale to understand that India – a nation of 1.2 billion people – spent a total of 96.3 billion dollars on health care in 2013.
Six years have passed since the ‘affordable’ care act passed. Those responsible for this new world order are now strident partisans striving valiantly to show their value. Unfortunately, finding value in this new world is as hard as finding the Emperor’s new clothes. The only indisputable fact is that eight years after candidate Obama promised efficient, sustainable healthcare, we now spend more than ever on health care at an accelerating pace. A course correction is desperately needed. One hopes the new administration will be up to the task.
Anish Koka is a cardiologist based in Philadelphia.