Deep Currents, Surface Storms - Healthcare (2)

(CBO Monthly Budget Report)

The above chart presents some great news: combined Medicare/Medicaid spending for the first two months of F2014 (October-November) is down 2% from F2013 levels. This continues the trend pointed to in this chart from the Council of Economic Advisers' recent report on how the ACA is helping to moderate healthcare costs.

Medicare and Medicaid costs are flatlining. As the chart above shows, costs per capita are flat for Medicare and down for Medicaid since 2010, when the ACA was launched. In point of fact, on a gross basis (overall year to year spending comparisons), they are flat as well, meaning that the cost slowdown thus far has been able to absorb the demographic increase in enrollees, due to the retiring of the Baby Boomers, without increasing spending. The October-November F2014 numbers above show this trend is continuing.

REMEMBER: If Medicare/Medicaid costs in the future rise at the same rate as GDP, we do not have a Budget problem, or a long-term Debt problem, or an Entitlement problem. And this conclusion is not partisan; it's math. The central assumption driving our Long Term Budget Outlooks is that after a brief respite, due mostly to the Great Recession, healthcare costs will start rising again, in excess of GDP (Excess Cost Growth - targeted by the CBO at 1.5% kicking in after 2018); so Medicare/Medicaid will grow as a percent of GDP, driving up deficits, and causing an inexorable rise in the Debt/GDP ratio. But if there is no Excess Cost Growth, there will be no rise in the Debt/GDP ratio. AND SINCE 2010, EXCESS COST GROWTH HAS BEEN NEGATIVE.

Ezekiel Emmanuel, Sen. Sheldon Whitehouse (D, RI) and Peter Orzag have a great op-ed in Bloomberg this morning pointing to the continued Medicare/Medicaid slowdown, and calling on the President to declare it a National Goal ("Put a man on the moon by the end of the decade." -John F. Kennedy) that healthcare costs will not rise faster than inflation (or GDP). Here's the op-ed:

 President Obama should step forward with bold national goals. One would be a dollar-and-date target for total health-care savings, based on the above projections for improvements in the quality and coordination of care. Or, to make the goal easily measurable, the president could declare that, starting in 2020, health-care spending per person should rise no faster than general inflation.

President Obama could also set specific goals for reforming payment systems and digitizing medical information -- both crucial strategies for lowering costs while improving care. By 2020, at least 75 percent of Medicare payments should be assessed in some way other than fee-for-service. Alternative fee-for-value mechanisms, such as bundled payments and accountable care organizations, do away with incentives to merely provide more care. 

The president could also set a goal to use zero paper in the health sector by 2020. A paperless system would improve the patient experience and bolster safety by reducing errors; it would enable doctors and hospitals to better respond to incentives to provide high-value care; it would lower the costs of billing and filing claims; and the robust data it would yield could propel innovation in personal health-care mobile applications.

Imagine paperless health care in 2020, with no real per capita growth and with most payments set according to value rather than intensity of treatment. That’s a set of goals worth shooting for."

This is happening and almost nobody knows it! The long-term cost slowdown is a Deep Current, which most do not see, because they are endlessly distracted by the distractions! The Right. and, it seems, much of the media are committed to the Collapsing Obamacare story, and the crystalline certainty that 2014 will be a Red-Tide year, due to Obamacare's failure.

By next April, we will know that the rollout of Obamacare is, at the least, a modest success. I suspect that between now and then, the Deep Current Story of the slowdown in healthcare cost growth will give smart Dems a strong platform on which to attack their GOP rivals, perhaps somewhat as follows:

"The website got fixed. More than 10 million people have signed up, below the original 16 million target; but 5 million of that "miss" is due to GOP Governors in 24 states that refused the Medicaid expansion. So all in all, pretty good work against targets. So the uninsured are getting covered. The economy is picking up more steam, partly because these 10 million newly covered people have some more money to spend, and are feeling less anxious. The Bill has very much increased our country's focus on preventive health, which will help control costs. And perhaps best of all, the cost curve has been bent; Medicare and Medicaid have been and are projected to continue to grow at a rate below that of GDP, which means we have neither an Entitlement nor a Long Term Debt problem. If you, the voter, want all this to continue, turf the GOP out of office. Don't give them any more chances to repeal this amazing law. Vote Blue!"

Tomorrow we'll look at how Obama's Leading from Behind made all this possible.