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Within two days, from two highly respected health economists, we see two stunningly different interpretations of the current and now accepted dramatic lowering in U.S. health care inflation, as estimated by the independent actuaries at the federal Centers for Medicare and Medicaid Services (CMS). This difference is not academic -- and the winning interpretation holds huge consequence for U.S. health policy and the U.S. economy.
Our Good Cop is Karen Davis, respected head of the Commonwealth Fund, commenting in a January 18 CF blog on the new cost projections from the federal government:
"CMS is projecting lower health spending over the rest of the decade. While it is almost certainly the case that the poor economy is having an effect on current spending, the recession doesn't plausibly explain why projected health spending in 2020 is substantially below estimates made just two years ago. Either the original estimates were too high, or the tectonic plates underlying the health system are beginning to shift in anticipation of new incentives under health reform or in response to health care leaders' efforts to transform care over the last decade. ... Already, spending is far below the trajectory projected to result from implementation of the Affordable Care Act. In fact, reduction in utilization of health services and trims in payment rates under the Affordable Care Act more than offset the projected cost of covering the uninsured."