By Kip Sullivan, J.D. and Stephen Soumerai, Sc.D.
MedPage Today, July 29, 2019
Total healthcare spending in the U.S. has risen relentlessly for the last half-century. Obviously, this cannot go on forever. To curb this disastrous increase in healthcare costs, politicians and their advisors must help the public understand which cost-control policies work and which ones fail. A recent STAT News op-ed by Ezekiel Emanuel, MD, a University of Pennsylvania ethicist and former health policy advisor to President Barack Obama, illustrates how wishful thinking can misinform the public about health policy, in this case, the Affordable Care Act (ACA).
Emanuel’s essay correctly notes that Obamacare reduced the ranks of the uninsured, but his claim that it reduced healthcare spending is false. Emanuel concluded that the ACA, which he helped write, “reduced healthcare spending a total of $2.3 trillion” from 2010, the year the ACA was enacted, to 2017. He went on to make an equally astonishing and erroneous claim about health insurance premiums. He alleged they fell by $1,000 per worker, and “about $4,000” for family coverage from 2010 to 2017.
The figures below reveal at a glance that Emanuel was wildly off the mark on both counts. Figure 1 shows that healthcare spending as a percent of gross domestic product continued to rise after 2010 at about the same rate it has risen for the last 50 years. Figure 2 shows that premiums for family coverage for American workers also rose after 2010 at the same rate as before 2010.
How did Emanuel persuade himself that total spending fell after 2010 when the reverse is true? He did so by dusting off a report published in 2010 by the Office of the Actuary (OACT) of the Department of Health and Human Services that sought to estimate the impact of the ACA on total medical spending over the next decade (2010-2019). The report’s authors virtually shouted at their readers not to rely on it. OACT warned readers its estimate was “subject to much greater uncertainty than normal” and “should be interpreted cautiously in view of [its] limitations.”
But Emanuel ignored OACT’s warnings. He based his entire argument upon OACT’s 2010 guesstimate of what total spending might be in each of the years from 2010 to 2017. As it turned out, OACT’s guestimate of spending over those years exceeded actual spending by $2.3 trillion. The rational explanation for the difference is that OACT’s guesstimate was inaccurate. But Emanuel concluded the ACA cut expenditures — a fatal methodological flaw disqualifying it from scientific discussion.
Emanuel made much of the fact that OACT was the author of not only the 2010 guesstimate but of the annual reports on actual spending for the years 2010 through 2017 (these reports are the source for data in Figure 1). Not one of OACT’s annual reports after 2010 even hinted that the ACA lowered national spending. Instead, OACT reported the ACA’s impact was either negligible or inflationary.
For example, the OACT report on 2012 spending stated, “The … ACA had a minimal impact on overall national health spending growth,” and its report on 2015 spending stated the ACA was the “primary” reason why healthcare costs rose at an unusually high rate. OACT’s 2018 report does not even mention the ACA. And most economists agree with OACT’s analysis. The prestigious Leonard Davis Institute of Health Economics at the University of Pennsylvania (Emanuel’s university) found “little evidence that ACA cost containment provisions produced changes necessary to ‘bend the cost curve.'”
Emanuel’s arguments would be more credible if he had identified even one ACA policy that reduced costs. But the only ACA policy he mentioned was a program that, he writes, “required reducing … wasteful readmissions.”
This would be the Hospital Readmissions Reduction Program (HRRP), a dangerous program that should be terminated immediately. The HRRP’s proponents claimed it would cut costs and improve health by penalizing hospitals for “too many” hospital readmissions. But the evidence now indicates this program is backfiring. Well-controlled studies show the HRRP may have raised the mortality rate among heart failure and pneumonia patients by reducing necessary readmissions, and it has not cut costs.
We share Emanuel’s commitment to an efficient healthcare system with evidence-based price controls. But cheerleading from academic leaders about the false achievements of futile, and sometimes harmful, cost-containment policies has unintended consequences for health and efficiency, and it undermines our ability to build a universal, affordable healthcare system. We already have reliable methods to evaluate the successes and failures of national cost-control policies. Congress and the President must base future health policies on solid evidence of benefits without patient harms. And if we have the guts to be honest, we will acknowledge that learning from failure can be the key to future success.
Kip Sullivan, JD, is a member of the policy advisory board for Health Care for All Minnesota and the Minnesota chapter of Physicians for a National Health Program. Stephen Soumerai, ScD, is professor of population medicine, founding and former director of the Division of Health Policy and Insurance Research, and teaches research methods at Harvard Medical School.