Tuesday, February 12, 2013

Obamacare leads to slower growth in health spending, further deficit reduction

The Congressional Budget Office reports that “from 2009 to 2011, total health spending grew at the lowest annual pace since the government started keeping records 52 years ago, a trend that seems to have continued last year.”  Also, Medicare spending in 2012 grew at the slowest rate since 2000.
That’s very good news because Medicare and Medicaid health spending is a major driver of the national deficit.  If this slower rate of growth in health spending continues, billions of dollars will be erased from the projected deficit taking pressure off impending spending cuts in domestic and defense programs and the need for substantial increases in revenue collections.

Changes in health care practices by doctors, hospitals and insurance companies are contributing to this slower growth of health spending.  I don’t find that at all surprising.  These changes are largely in response to Obamacare.  The entire health sector is being forced to live with the reality that it can no longer depend upon uncontrolled price increases and service expansion to generate profits.  It is another reason to celebrate the passage of Obamacare.

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