Thanks Obama: Medical Costs Projected to Rise 8.5% in 2012


obama-health-careHealth care costs just keep rising – and at an ever-faster pace. Medical costs for workers are projected to increase 8.5 percent in 2012, up from an 8 percent increase in 2011, according to a new report from

consulting firm PwC’s Health Research Institute.

In the report summary, PwC names three key price accelerators:

•Provider consolidation continues
•Cost-shifting from Medicare and Medicaid increases
•Post-recession stress builds up on the workforce

So, the recession bears a bit of the blame, but the bulk of it falls on the unaffordable Affordable Care Act. Or, as PwC more politely puts it, “An interesting blend of reactions to the recession, the slow recovery, health reform and other variables will affect the medical cost trend in 2012.” But, certainly, provider consolidation was a stated goal of Obamacare, as Julian Pecquet explains:

Improving care coordination is a key goal of the law that the government hopes will lower costs over the long term, but health insurers say it will reduce competition and increase rates.

Of course it will. PwC’s second price accelerator shouldn’t come as much of a surprise, either. As Medicaid and Medicare pay an even smaller proportion of cost to hospitals, private payers will have no choice but to pay more. The report puts it this way:

Private health plans generally pay above costs, while Medicare and Medicaid pay below costs to hospitals and physicians. For example, in 2009, on average, Medicare and Medicaid paid about 90 percent and 89 percent, respectively, of cost to hospitals, while private payers paid 134 percent of cost to hospitals. Medicare accounts for about 42 percent of hospital inpatient days; Medicaid accounts for about 11 percent. Both shares have been increasing and thus pushing uncovered costs onto a smaller base of private payers. Medicare and Medicaid rates are expected to decline relative to private payment in 2012 because of the impact of the PPACA on Medicare payment rates and the impact of the recession on Medicaid.

In 2008, the United States had a health care problem: high costs (among other things). In 2012, the United States will still have a health care problem: higher costs. All health care conversation fatigue aside, it’s no wonder the issue remains of paramount importance for presidential hopefuls.

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  1. No, we shouldn’t: U.S. health care cost increases dropped under Bush and were down to 6% annually for the last two years of his presidency. Obama promised that when his plan passed, “premiums would drop by 3,000%”. Still waiting for that…

    Check your facts before posting!

  2. Sure there’s a rise in health care costs. The drug industry is raising prices on numerous “blockbuster” drugs for diabetes, high cholesterol, etc. which are about to go out of patent. They’re trying to squeeze the last dime out of people whose lives depend on those drugs before cheaper generic versions come out.

    Who ultimately foots the bill? You and I, either directly or through government aid. Or do you think that someone with diabetes or heart disease should simply be forced to die because they can’t afford to contribute to the skyrocketing profits of the big drug houses? Isn’t that the sort of thing that got S’dom obliterated? (Check your Pirket Avos and Midrash Rabbah.)

    Why do we have the highest medical expenditures in the world, and second-class medical outcomes? Good old greed, that’s why.

  3. So why is an article from a web iste called “Hot Air” a reliable source for anything?
    They made a mistake immediately- consolidation is not coordination. The two have nothing to do with each other.

    I suggest this Hot Air Media see this article as the final article that appears in Matzav.

    Secondly the factors noted for the rise have nothing to do with Obama

    Thirdly healthcare is rising and Obamacare lowers the rate of increase as per the republican and democratic bipartisan accounts of the Congressional Budget Office.

    This decrease in the rate of increase has not been withdrawn by the CBO ever since they put their signatures to it and a year later the CBO released an official report as required explaining that if Obamacare is REPEALED it will cost the United States billions of dollars in higher costs over the decade.