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Where The Savings Are

November 21, 2013
12:12 pm

There is more good news on the healthcare cost front.  The White House Council of Economic Advisers has issued a report noting that real per capita healthcare spending has increased in this decade at an average annual rate of just 1.3 percent.   This lower spending rate – which encompasses Medicare, Medicaid and private health insurance – represents the lowest healthcare price inflation rate in 50 years.

(Reasonable people will have differences on the reasons for this cost containment success.  The White House, understandably, wants to give ample credit to the Affordable Care Act.  Some say it’s a result of the nation’s economic stagnation.  I would argue that innovations in many healthcare sectors – documented in detail here – are providing patients and consumers with higher quality at less cost.)

This continuing trend regarding healthcare costs deserves special attention as a special joint congressional committee negotiates budgetary issues.  There is a desire among many lawmakers to do away with all or part of the budget sequester and replace it with targeted cuts.  The data we’re seeing from the White House and other sources underscores that there is no compelling reason to target healthcare programs for arbitrary reductions, cuts that could have an adverse impact on access, quality and innovation and undo many of the successes we’re seeing in containing long-term cost escalation.

Instead, if Congress is looking for some possible pools of money to replace sequester cuts, a good idea might be hiring the Pentagon some better accountants to see what the military is getting for trillions of dollars in spending that has, according to a Reuters investigation, never been sufficiently audited.  Just a thought.

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