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Analysis: Health Care Costs Have Risen Nearly 10 Percent

11:25 AM, Apr 30, 2014 • By MICHAEL WARREN
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Health care costs rose in the first quarter of 2014 by 9.9 percent, according to a quarterly report from the Bureau of Economic Analysis. The jump in costs with respect to real GDP comes after several periods of more modest health care cost growth. In 2013, for instance, costs only grew 2.4 percent from the previous year.

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The rise in costs and rate of growth calls into question claims from supporters of the federal health care law, including President Obama, who claimed Obamacare would "bend the cost curve" and slow down the rate of growth in health care spending. Obama and Obamcare supporters have been trumpeting, for instance, their exceeding a goal of signing up nearly 8 million enrollees on health-insurance plans by way of the law's provisions.

But before the BEA's release of the newest numbers on health care costs, economist Charles Blahous warned earlier this month of an "unfolding fiscal disaster" behind those enrollment numbers, mainly because of Medicare cost increases. Here's Blahous:

Earlier this month there was tremendous press attention to new data indicating that enrollment in the Affordable Care Act (ACA)’s health insurance exchanges had surpassed 7 million. The White House took a victory lap while much of the press, desperate to write something positive after months of reporting on website glitches and insurance plan cancellations, characterized the milestone as good political news for ACA supporters. Our national discussion, however, is missing the truly significant story here; what is unfolding before our eyes is a colossal fiscal disaster, poised to haunt legislators and taxpayers for decades to come.

It is quite possible that the ACA is shaping up as the greatest act of fiscal irresponsibility ever committed by federal legislators. Nothing immediately comes to mind as comparable to it. Certainly no tax legislation is, because tax rates rise and fall frequently, such that one Congress’s tax cut can be (and often is) undone by a later tax increase. The same is true for legislation affecting appropriated spending programs. But the ACA is a commitment to permanently subsidize comprehensive health insurance for millions who could not otherwise afford it, which the federal government has no viable plan to finance. Moreover, experience shows that it is very difficult to scale back such spending once large numbers of Americans have been made dependent on it. 

Read his full argument here.

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