David Wessel’s column today in the Wall Street Journal might be welcoming news if you wear a green eyeshade for a living. I don’t know why the rest of us should find it so encouraging:
For the past couple of years, U.S. health-care spending has been growing at a surprisingly slow pace.
A lot of this is the recession and its aftermath. Americans cut back spending on nearly everything but iPhones. They go less frequently to the doctor, put off elective procedures and cut back on prescription drugs. It is the most significant slowdown in health spending since the heyday of managed care in the late 1990s [...]
Harvard University economist David Cutler … attributes about a third of the slowdown to the transitory impact of the recession, and another dollop to recent cuts in government payment rates to providers and to the drug industry’s inability to find pricey new drugs to replace the revenue from generics.
But Mr. Cutler speculates a significant part of the slowdown reflects changes in consumer and provider behavior that will persist. Americans are using less health care because they are being forced to pay more out of pocket. Indeed, the share of insured workers with deductibles of $1,000 or more rose to 31% in 2011 from 18% in 2008, Kaiser estimates. “A lot of people are saying: Do I really need this?” Mr. Cutler says, who notes a distinct slowing in the pace of spending on CT scans, MRIs and other imaging.
Jared Bernstein calls these results the most important of the day for fiscal policy. And that’s true to an extent. But there’s a fine line between cost-shifting leading to less takeup of unnecesary care and cost-shifting leading to people saying they won’t get medical treatment because they cannot afford it, even with insurance coverage. Jon Walker has illustrated on several occasions that the reason for the soaring cost of health care in America comes down to higher prices, not over-utilization. The changes to the delivery system would drive down prices somewhat, if doctors are rewarded for care rather than on a per-treatment basis. But if we’re seeing slower growth in health spending because people are “shopping” for CT scans and MRIs, then Americans are subjecting themselves to less diligent treatment than in other countries. If we reduced the cost of CT scans and MRIs along with tackling utilization, Americans could have equal treatments with equal outcomes as the rest of the developed world. But instead, health spending growth success is correlated with Americans giving up care. I don’t understand totally how that’s a positive story.
The attempt to squeeze patients and steer them away from certain procedures can be positive, if those procedures are costly and provide no benefit. But the reason that’s become a source for “bending the cost curve” is that the country won’t implement the proven policy on reducing health spending, namely a single-payer program that drives down prices so they’re commensurate with the rest of the world. Until we do that, we have this poor incentive.