Friday, August 29, 2014

EDITORIAL >> Health care costs falling

Call us suckers for good news, but can it hurt to celebrate some now and then in this sea of troubles?

We’re speaking of health care, where the news has been depressing to catastrophic for four decades: steeply rising costs nearly every year for treatment, medicine and insurance; the bleak future for the federal budget owing to baby-boomer retirements and mushrooming projections of Medicare and Medicaid costs; the growing share of the population without insurance; the deteriorating quality of care; and, of course, nearly five years of daily scares about Obamacare.

Suddenly, this spring and summer, nearly all the bad news has turned hopeful and, perhaps for the first time in history, Arkansas is the pacesetter for good news. We don’t mind the national recognition, but we’re happier for what it means in the lives of people in this state and the country.

Let’s start with the local stuff.

The insurance companies offering policies in the new market created by the Affordable Care Act (a.k.a. Obamacare) in Arkansas are actually lowering the premiums for the next season by a net of 2 percent. That is exceedingly good news for some 230,000 Arkansans who are already insured by Obamacare and also for the tens of thousands who will begin to enroll in the second season, which starts Nov. 15. It’s good news for the state government, too, which eventually will assume 10 percent of the cost of the Medicaid portion of those insured. The legislature this spring passed a law prohibiting the state from educating Arkansans about their opportunities to get insured by Obamacare or helping them enroll, but the word will get out. There is evidence that many large employers are driving their workers into the Obamacare exchanges to reduce their overhead, and the lower premiums will accelerate that process. Will that translate into more jobs?

We have been accustomed to premium increases of 10 percent a year or more, so a net decrease of 2 percent, even if it is only in the Obamacare exchange, is a happy development. Group and individual policies outside Obamacare may see the usual premium increases, especially substandard policies that will soon have to give the same protections to people as those in Obamacare. But the costs in that market as well have tended to flatten since the Affordable Care Act became law four years ago.

The impact from 230,000 Arkansans joining the insured does not stop there. The number of Arkansans joining the federal disability rolls has declined sharply this year, as have emergency-room visits and hospital admissions. The demand for charity medicine has plummeted.

Then there is the pocketbook news. Elderly Arkansans, generally the sickest of them, have pocketed some $125 million in drug savings since 2011 because Obamacare each year closes the doughnut hole in Medicare prescription coverage. Since 2012, something more than 125,000 Arkansans who aren’t in Obamacare shared $17.7 million in rebates from their insurance companies because the same law orders rebates when companies don’t spend at least 85 percent of the premiums they collect paying for actual medical care. Thousands of children have been added to Medicaid and private insurance rolls because Obamacare said their infirmities, many from birth, could no longer prevent their being insured.

Arkansas’ Medicaid spending profile is bending downward for a change because a reform suggested by the Affordable Care on the reimbursement for episodes of care has proved wildly successful. Several insurance companies adopted the system, too, and are lowering costs and improving treatment. Other states are starting to embrace the model and perhaps soon it will become universal.

Now for the national news. For the sixth year in a row, since Congress started work on the Affordable Care Act in 2009, the Congressional Budget Office has reduced its forecast for how much the federal government will need to spend on Medicare in the future. Every year, based on the Medicare experience of the previous year, the CBO reduces its projections. The projection for 2019 this summer is $95 billion lower than it was four years ago.

The reforms in Obamacare and some changes in Medicare in the Budget Control Act of 2011 are the main reasons, but some of the impact is indirect. The cost of medical treatment is not climbing at nearly the pace it was in 2008 and the years before. Every year, the pace slows.

The good news for everyone is that the long-term budget deficit of the federal government keeps shrinking as a problem, partly because of the brightening outlook for Medicare and the slowing of medical inflation. We still face a deficit for years to come, but the fiscal pain that will be needed to eliminate it will be far less severe, whenever we get a Congress with the will to compromise and address it.

Together, Obamacare and the Budget Control Act will have reduced Medicare spending by $700 billion over the 2010-20 decade without reducing the benefits of any of the 550,000 Medicare enrollees in Arkansas. It is done by reducing the reimbursements to hospitals and many specialists and reducing the subsidies to insurance companies that provide Medicare Advantage policies.

End of the respite from tempests and travail.