And Now Obamacare Is Working Too Well

There are too many poor people enrolled in Medicaid, too many sick people in the risk pools and, now, too many new patients driving up health care spending over the last three months.

There are too many poor people enrolled in Medicaid, too many sick people in the risk pools, and now, too many new patients driving up health care spending over the last three months. Today's apocalyptic sign of Obamacare's failure is a huge spike in health care spending, the sort of thing the law promised to reduce. That (temporary) spike was the result of millions of recently insured Americans using their new insurance, not that that matters. One of Obamacare's biggest problems is that it's criticized for achieving one of its main goals: insuring people who needed insurance.

The new report from the Bureau of Economic Analysts found that health care spending rose 9.9 percent during the first three months of 2014, the largest increase since 1980. That's largely because of costs associated with implementing Obamacare, specifically new costs from Medicaid and private insurance enrollees. 

Right-leaning outlets like The Washington Examiner, The Weekly Standard and Town Hall wrote that health care spending "exploded" during the first quarter of this year because of the health care law, proving that Obummercare is failing. In other words, critics are upset that a rush of sick, recently insured people are using the insurance they just enrolled in. "Obamacare was pitched as a plan to reduce health care spending," wrote Philip Klein of the Examiner. "Obama and his allies had been crediting a slowdown in the rate of growth for health care to payment reforms imposed by the law. But other analysts predicted that spending would pick up as the economy improved and people started loosening the family purse strings." 

Several writers agreed that this post-Obamacare health care spending spike was predicted several years ago, but is actually the result of the recently insured using their new insurance. "A lot of the utilization was people who didn't have health insurance who are now able to go to the doctor and afford drugs," Jason Furman, chair of the Council of Economic Advisors, told Vox's Sarah Kliff. "That's a good thing for families and was a goal of the Affordable Care Act." Kliff noted that while people are using more medical services, health care costs are growing slowly. "This essentially means that people can buy more health care for their dollar now than they could last year," she wrote. 

Jonathan Chait at New York magazine pointed to a 2009 post from Jonathan Cohn and a 2010 post from Ezra Klein which both argue that this would happen. "What you're seeing here isn't the cost curve bending up," Klein wrote. "It's a one-time increase in the level of spending." Cohn explained that "the rate of growth jumps up above baseline as the uninsured are brought into the system." Both argue that rates will drop lower than they would have without reform.

Philip Klein correctly pointed out that Obamacare is projected to reduce health care spending, but he neglected to mention that this year's Q1 spike was a result of people using insurance — the other part of the law. And that's been the defining characteristic of the debate — the focus is on premature predictions of higher costs, with not enough attention to the human element. As Jay Gellert, the president and CEO of California-based Health Net, put it during Tuesday's Politico Pro Health Care Breakfast Briefing, the media's attention to numbers often ignores the positive benefits of reform. "I think we've learned that people don't know how to cover this," Gellert says around the 51:40 mark. "Because the entire last year we've argued over the fact that not enough healthy people are in the pool. No one has ever said isn't it great we've gotten sick people into the pool." 

Gellert argued that the goal of Obamacare was to give sick people health security, but "all the reporting is about the exact opposite of what we tried to do." This spike in health care spending is exactly that — Obamacare doing what it's supposed to do. More of the reporting should focus on that.