The Secret to Taming Health-Care Costs

via Wall Street Journal

Monday’s report from the Congressional Budget Office on the country’s long-term economic outlook underscores what budget experts have long known: The rising cost of health care is the single largest driver of the gloomy long-term fiscal outlook for the U.S. Yes, the pace of increase has moderated in recent years. But many of the factors reducing cost increases are likely to prove transient.

In a balanced analysis of the evidence issued in September, the Center for American Progress (CAP) gives the Affordable Care Act some credit for slower growth—for example, by providing incentives that lower the rate at which patients are readmitted to hospitals after being discharged. But CAP also finds that between 37% and 70% of the slowdown is attributable to the Great Recession, which reduced the demand for health-care services by consumers with private insurance.

One recent study suggests that rising copayments and deductibles account for another 20%; other studies find that the number could be even higher. The use of new technologies has also moderated costs, and cheaper generic-drug prescriptions constitute a higher share of the total spent on medicines. The difficulty, the CAP report concludes, is that several of these factors had a “one-time effect” on health-care spending and “cannot be expected to moderate the growth of spending over the long term.”

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About thebenefitblog

Eric is a Producer at Lockton Insurance Brokers, Inc., the world’s largest privately held commercial broker. Eric has over 23 years of experience in the insurance industry and has spent the last 11 years with Lockton. Eric specializes in Health & Welfare Benefits, Retirement Planning, and Executive Benefits. Eric's clients utilize his expertise in the areas of Plan Due Diligence, Transaction Structure, Fiduciary Oversight, Investment Design, Compliance and Vendor negotiation to improve the operational & financial outcome for each client. The Benefit Blog is a place to share that expertise and industry news.
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