Reminder: Health Care Cost Curve to Bend Up Again Next Year

A new analysis by Aon Hewitt predicts that the slow down in health care costs, which the company says hit a low of 3.3 percent in 2013, will end next year. The company predicts health care costs will rise 6.7 percent in 2014.

Tim Nimmer, health care actuary at Aon Hewitt, said “There are many factors that contributed to the lower rate of premium
increases we saw over the past two years that we don’t expect to
continue in the long-term.”

The new estimate by Aon is in line with a previous estimate by the CMS. CMS predicted health care costs would rise 6.1 percent in 2014 after several years of slowing growth.

Throughout 2013 the decline in health care costs has been pointed out by the White House as evidence in favor of the President’s health reforms. In July an unnamed White House adviser claimed the ACA deserved credit. As recently as September the President himself attributed the decline to the ACA saying “Thanks in part to the Affordable Care Act, also known as ‘Obamacare,’
the cost of health care is now growing at the slowest rate in 50 years.”

The President was careful to include the words “in part” because there is wide disagreement about whether the ACA is responsible for some or any of the decline. One estimate by the Kaiser Family Foundations found that 77 percent of the reduction was the result of the economic downturn. Some writers have argued that the ACA deserves credit for some or all of the remaining 23 percent.

Slate’s Matt Yglesias noted in August “it’s actually quite hard to point to a specific provision in the
law that’s been fully implemented and that would have this kind of
impact” but he went on to suggest the ACA probably deserved credit for bending the curve.

But the actuaries at CMS aren’t convinced. Medicare economist Stephen Heffler told Sarah Kliff, “The work we’ve done has shown there’s a strong relationship [between
economic downturns and slower health spending]. Until we have evidence
that its been broken, its difficult for us to conclude that something
structural has occured.”

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