Finger-Pointing: Another Side Effect of the New Health Care Law

by Greentarget

The Patient Protection and Affordable Care Act will change a lot of things in health care in 2013 and 2014. But the law probably won’t stop medical costs from rising—or end the search for someone to blame for the inflation.

The scapegoats in the past have frequently been insurance companies. This time, as The Washington Post reported in October, the industry aims to fight back. Their lobbyists will argue that, sure, premiums are up, but that’s only because the underlying health care costs have risen.

The insurance lobby has been fingering hospitals, which frequently charge different amounts for the same procedures, depending on who is getting the care. “As we look at the challenge of rising hospital costs, for example, I think there are questions of how do we have more transparency about what they’re charging,” one prominent insurance industry lobbyist told the Post.

Health care inflation has been so pernicious in the past decade that when costs have risen at less than 3 percent per year, it’s been hailed as headline news. The Wall Street Journal reported this fall that U.S. health-care spending grew at a “surprisingly slow pace” between 2005 and 2010. Spending on health care grew, on average, 2.1 percent a year during that five-year period, compared to 4.3 percent per-year growth in the previous five years. (Harvard University economist David Cutler told the Journal that the slowdown was due to recent cuts in government payment rates to providers and to consumers buying less care to avoid out-of-pocket costs.)

Others who will be blamed for the continued rise in health-care costs will probably include plaintiff attorneys or consultants who offer advice to various subsets of the industry. Of course, critics will also attack politicians who passed the Affordable Care Act and the regulators who must oversee its full implementation.

More than a dozen states, including Texas, Georgia and Alabama, have declined to set up the insurance exchanges mandated by the Affordable Care Act, opting to have the federal government run them instead. Politicians—Republicans, especially—in those states have frequently cited costs as part of the reason why. Last month Arizona governor Jan Brewer cited operating costs that would be passed along to consumers in the form of higher premiums as one of the reasons she wanted the federal government to run her state’s insurance exchange.

Late in November, the Obama administration said that insurance companies would be charged user fees for the privilege of selling their health care plans on state and federal exchanges set up by the new law. The fees could boost insurance premiums by as much as 3.5 percent.

Some states are seeking novel ways to keep costs down. Massachusetts passed a health care cost containment law in August and, according to The Boston Herald, recently told health insurers bidding to participate in its exchange that it “will not accept anything higher than a 2 percent increase in the commonwealth’s cost for the next two years.”

With so much in flux, it’s difficult to be certain where the health care industry will be a year from now. But if you’re involved in health care in any way, you should assume that somebody somewhere thinks you’re at least partly to blame for everybody’s rising medical bills.

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