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Sluggish Economy Explains Slowdown in Health Care Spending

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Doctor with patient
Doctor with patient
Photographer: David Paul Morris/Bloomberg.


Health care spending has slowed since 2008. Obamacare proponents in the White House want you to think that the health care law is responsible, but that’s not likely the case, say researchers at Northwestern University. A study in Health Affairs finds that about 70% of the slowdown in health care spending growth is due to the slowly-recovering economy [emphasis mine]:

"By exploiting regional variations in the severity of the slowdown, we determined that the economic slowdown explained approximately 70% of the slowdown in health spending growth for the people in our sample. This suggests that the recent decline is not primarily the result of structural changes in the health sector or of components of the Affordable Care Act, and that — absent other changes in the health care system — an economic recovery will result in increased health spending.

Notice how this is about slowing the growth in health care spending, and not lowering health care spending by $200 billion annually ($2,500 for an average family) as Candidate Obama promised in 2008.

Brett Logiurato at Buisness Insider explains the methodology used in this study:

The researchers compared healthcare spending trends from 2007-09 and 2009-11 in metropolitan areas that were hit particularly hard by the recession (like Las Vegas) and those that weren't (like Dallas). It found that in places like Las Vegas, in which there was a 5.6% employment-to-population decline from 2009-11, health spending only grew 5.4% from 2007-11. In Dallas, which saw a 3% employment-to-population decline, healthcare spending exploded by 28%.

This study's findings match a 2013 Kaiser Family Foundation study that concluded that the economic slowdown accounted for 77% of reduced health care spending growth.

What this tells us is that Obamacare’s rules, regulations, mandates, and taxes have so far been mostly ineffective and could prove to be even more so when the economy does pick up speed. This is why we need solutions like those found in the U.S. Chamber’s Health Care Solutions Council report that will control health care costs, improve quality, and expand access. 

Follow Sean Hackbarth on Twitter at @seanhackbarth and the U.S. Chamber at @uschamber.

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