There has been a surge of insurance enrollment and healthcare spending because of rising employment and President Obama’s healthcare law, the Affordable Health Care Act. While this should be viewed as a good sign, having had a downward curve on health care spending in the past years because of structural changes in the healthcare delivery system and the economic recession, experts wonder if the government and private sectors can control spending as the US economy gets stronger and millions of Americans enroll in healthcare coverage.
According to President Obama, because of the new healthcare law, eight million Americans had signed up for insurance coverage. This has allowed Medicare costs per person to remain low and Americans to shell out less in healthcare than anticipated. What they save in healthcare coverage can be spent on businesses and that will snowball into businesses needing more workers and keeping the economy in good spirits.
A report from IMS, a healthcare data and analytics firm, found use of the healthcare system increasing broadly in 2013. Americans made more visits to doctors’ offices, were hospitalized more often and purchased more prescription medication.
Is this a good sign?
Policy experts are divided on the issue. While an increase in Americans signing up for health care coverage is a good sign, experts and economists say that an expanded coverage might have an opposite effect.
Americans, confident of healthcare coverage, might demand more procedures from doctors and hospitals. Doctors and hospitals pay more money for these procedures for their (liability) insurance and in time, these might lead to increased premiums (insurance companies increase premiums because more procedures are performed, hence, more coverage and spending), affecting supposed wage gains from the expanded health care coverage. When this happens, the government would end up spending more than what the current projections imply.
How will this happen?
When insurance premiums cost more, it would also increase the cost of healthcare law’s expansion. The new healthcare act has wider health coverage in all classes while keeping Medicare cost per person the same. While this growth and coverage is ideal and commendable, whatever the difference would be shouldered the government. Excess spending on healthcare owing to “growth”, could increase the country’s debt and curtail spending on other priorities: education, research and development, infrastructure are just a few examples.
But the White House is confident that this will not be the case. The reports coming out are still too much a small number to read into and other data have shown premiums and price growth of medical goods and services remained low. They are sure that even if only one-third of the wanted healthcare spending slowdown is sustained, the government would still be spending $1,200 less per person on healthcare in ten years.