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Healthcare Costs – I Got Confused by Some Graphs

I don’t follow healthcare as much as others at this blog. I started playing around with some graphs at FRED and got a bit confused. I don’t mind being confused, but I like to clear up that confusion eventually. So perhaps someone can tell me what’s going on.

First, this graph of healthcare expenditures / GDP which seems to indicate that Obamacare bent the cost curve:

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But looking at the annual change in healthcare expenditures / GDP, things become less clear:



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Here, it looks like the rate of increase in costs declined through the early oughts, went up as the economy tanked (i.e., healthcare costs continued rising but GDP fell), and then stayed more or less constant (through 2014,the last year with this series).   This graph doesn’t say Obamacare didn’t help, but it doesn’t scream that it does either.

But this next graph is a real problem.  It shows healthcare expenditures per capita:


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The rate of at which healthcare costs per capita have been increasing have been declining since 2001…  well before PPACA took effect.  Additionally, it kind of looks like healthcare costs per capita stopped declining after the passage of PPACA.  Worse, the rate of increase of healthcare costs per capita may have begun picking up since then.  That would imply that if there was any bending of the curve, it was the wrong way.

What am I missing?

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Healthcare Costs and Waste

Propublica has a story on waste in the medical industry:

Experts estimate the U.S. health care system wastes $765 billion annually — about a quarter of all the money that’s spent. Of that, an estimated $210 billion goes to unnecessary or needlessly expensive care, according to a 2012 report by the National Academy of Medicine

Having visited doctors in the past decade or two a few times, I can believe the 25% figure.  The billing structure alone creates massive amounts of waste.  But some see Propublica as overly liberal, so why not check their figures?   followed the links to the National Academies of Science, Engineering and Medicine and clicked on this slideshow from 2012. Slide seven was particularly interesting. It included the following bullet points:

• Health care costs constitute 18% of U.S. GDP
• 30% increase in personal income over the past decade effectively
eliminated by a 76% increase in health care costs
• $750B in waste

Now, in 2012, the year the report was published, GDP was $16.16 trillion. If healthcare spending was 18% of that, it amounted to about $2.91 trillion. And $750B, the amounted wasted is a bit more than 25%.  Which is to say, Propublica’s numbers are in line with the National Academy’s numbers from 2012.

Which raises a question…  wasn’t the point of not moving to a single payer regime that the private sector would eliminate waste such as this?

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