Slowing Health Care Costs and the Case For 'Liberal Hack Economists'

    As we saw yesterday healthcare costs have been decreasing over the last 4 years and that may be permanent. 

    http://diaryofarepublicanhater.blogspot.com/2013/05/fiscal-game-changer-dont-look-now-but.html

    Today there are some interesting pieces about the liberal reaction to it. It seems that there are no "liberal hacks" out there to give all the credit to ObamaCare. Here's Jonathan Bernstein:

    "To return to an oldie but goody: it's still striking to me that no one has jumped up to fill what appears to be a market opening for hack economists on the liberal side. This comes to mind this time from the reaction of economists, including liberal economists, to the sudden decrease in health care inflation over the last few years. As Annie Lowrey reports:

Major new studies from researchers at Harvard University, the Henry J. Kaiser Family Foundation and elsewhere have concurred that at least some of the slowdown is unrelated to the recession, and might persist as the economy recovers. 

     "Not, that is, "Obamacare is slashing health care inflation!" Lowrey does have some relatively optimistic quotes from David Cutler, health care economist, but they're still very tempered."

     "What we don't have, and haven't anywhere that I've seen it, are liberal economists claiming that the entire slowdown in costs has been ACA-related, or even the bulk of it (the bulk is in fact, economists tell us, recession-related, and of the rest it's not altogether clear where it came from)."

     "Just as we didn't see any liberal economists last year arguing that the economy was in fact way more healthy than people thought. If anything, in the lead-up to an election with a Democrat in the White House, most prominent liberal economists stressed the weaknesses of the economy."

     http://plainblogaboutpolitics.blogspot.com/2013/05/liberal-hack-economists-remain-mia-aca.html

     Noah Smith was saying that the best PhD to get is one in economics because unlike so many of them you will get an immediate job. 

     http://noahpinionblog.blogspot.com/2013/05/if-you-get-phd-get-economics-phd.html

   

     However, it seems that the supply of hack liberal economists is in short supply. Maybe I can get a job there. I was probably pretty close to saying the economy is better than many were making it sound. It's possible it could be better but it won't get better by electing Mitt Romney and it's better than it would be without Obama.

      Regarding the issue of claiming that ACA is the main reason for the lowering healthcare costs, Yglesias has a good reason as to when liberals aren't/shouldn't do this: what counts to Americans is not what the overall costs of healthcare are but what amount is coming out of their own pockets:

     "Here's the key fact—nobody cares even very slightly about health care costs.

     "It's easy to get confused about this because ordinary people seem to be very worried about the rising cost of health care. And wonks at the CBO also worry about health care cost growth. So when health care cost growth slows, shouldn't people be happy? Nope. The cost people care about is the price that they personally pay. People care about premiums. People care about deductibles. People care about co-pays. What people do not care about is the underlying price trajectory of the service. Having the insurance company pick up 90 percent of the tab for a $1,000 procedure is way better than having the insurance company pick up 50 percent of the tab for a $500 procedure. The government even recognizes this when collecting its statistics. The CPI health care component is about out-of-pocket costs and seeks to measure "the cost of living." The PCE deflator health care component is about the all-in price of purchasing health care services and seeks to measure "inflation." But even though people sometimes say they're worried about inflation, in fact people only care about the cost of living. Renters care a lot about local rent trends, but homeowners are not interested in owners' equivalent rent. Budget wonks care about the price of health care services, but human beings want to know how much they personally will have to spend on health care."

     "Long story short, if Democrats stand up in a world of rising premiums and higher deductibles and say Obamacare is causing a slowdown in health care cost growth, people are going to look at them like they're insane. Policy debates are one thing, but politicians who look at the clear blue sky and call it yellow are another."

     http://www.slate.com/blogs/moneybox/2013/05/07/healthcare_cost_slowdown_nobody_cares.html

     That makes sense: what does it matter if healthcare costs are going down if your portion of them aren't?  Yet even here can't we make a case for a Few, Good, Liberal Hack Economists? After all, one major reason that the VSP give for why the deficit and public debt are such a huge concern is the spiraling cost of healthcare, especially regarding Medicare. 

    How much credit you want to give ObamaCare is another matter. Yglesias does actually think the ACA has had a major hand in the reductions:

    "Now the fact of the matter is that health care cost growth is slowing. And frankly, I give the credit to the Affordable Care Act. If forward-looking investors think that future increases in health care spending will be met with legislative efforts to curb health care spending, then investments that drop rely on future high levels of health care spending won't be made and the system will lack the capacity to deliver ever-growing levels of services. You can see that health care construction spending crashed during the recession and hasn't bounced back. It's not that construction per se is such a large element of health care costs; it's that the failure to ramp up construction spending reflects pessimism (or optimism, depending on your viewpoint) about the future volume of health care revenues."

    However, the point is that even by the premises of the deficit scolds we may not need any further cost savings in Medicare if these numbers continue to hold-ie, they are not just due to the recession-regardless of what's responsible for the drop. 

   P.S My main point here is that whether you give all the credit to ACA-it certainly isn't all as the recession is also a part of it-or none, and even if Americans don't see how it benefits them, one positive we get out of it is that at least "liberal hacks" can point out that maybe Medicare doesn't need any more cuts and that we should at least wait to see if costs remain down and what the ACA impact is. 

   However, it's arguable that even if the costs of premiums, co-pays, and deductible don't go down at all it's a net major benefit for the economy: all that GDP spending going to healthcare can be put to more productive uses. 

   "Health care spending growth has famously slowed over the past five years, significantly enough that the Congressional Budget Office recently revised its projections of Medicare and Medicaid spending over the coming decade downward by hundreds of billions of dollars."

    "Now, research papers suggests the recent slowdown doesn’t just reflect temporary economic weakness, but also structural shifts in how health care is delivered and financed — possibly attributable to the Affordable Care Act — and thus might be a harbinger of a longer-term trend."

   "If they’re right, and the trend continues, it means workers can expect higher wages and the country’s projected medium term deficits are significantly overstated, which in turn suggests lawmakers’ continuing obsession with the current budget deficit, and deficits over the coming decade, are misguided."

     http://diaryofarepublicanhater.blogspot.com/2013/05/fiscal-game-changer-dont-look-now-but.html

   So there  really is something in it for us as well, it's not just numbers on a budget page; however, it takes education of the public.. Seems to me we need some good, liberal, hacks, then, and currently the ball is being dropped.