Fact-Checking the White House
The Office of the Medicare Actuary issued a report last week, finding that the new health law would raise, not lower, health care costs. The White House responded this way, according to the Associated Press:
Health reform director Nancy-Ann DeParle wrote on the White House blog last week that the same government report indicates spending per insured person will be more than $1,000 lower in 2019 because of the law — some 9 percent below previous projections.
“The act will make health care more affordable for Americans,” DeParle said.
See if you can tell how she’s trying to slip one past you before peeking below the fold.
If you divide total national health care spending by a bigger number of insured people, you get a smaller per-person result.
It’s an interesting statistic, but it doesn’t mean the problem of rising costs is solved.
“It’s not that it’s false, it’s just that it will be a little misleading,” John Allen Paulos, a mathematics professor at Temple University in Philadelphia, said of the White House number, calling it an “apples-to-oranges miscomparison.”
Consider an imaginary country with just three citizens, Peter, Paul and Mary. Peter has health coverage but Paul and Mary are uninsured. Peter spends $1,000 on health care, but Paul and Mary can only afford $500 apiece because they lack coverage. Total national spending: $2,000. National spending per insured person: $2,000.
Now suppose a law gets passed to expand coverage. Paul gets insurance, but Mary remains uninsured. Now Peter and Paul are spending $1,000 apiece. Paul spends more than when he was uninsured, so total national health spending goes up to $2,500.
But because more people are covered, spending per insured person goes down to $1,250.
It’s a simplistic comparison, but would you call that a savings?
I’ve seen this tactic before used in education as “spending per graduate.” It is suppose to show how efficiently a school is spending money, but in essence, all it reflects is the graduation rate of the school since the numerator is a large number ($) and the denominator is relatively small.
Similarly, “spending per insured” primarily reflects the number of insured for the same reason: spending has several more zero’s than # of insured people, it is much more affected by % insured.
Great explanation, btw.
Dividing an elevated health spending total by a larger number of insured people does not “…make health care more affordable for Americans.” It just further obscures the cost and makes the financing even less direct. That will fuel the rise in health care spending over time.
I agree. Misleading stat.
Load a couple of more people onto the income of productive people and claim that payments per person have gone down. It’s magic!
Gosh, I bet that they also think that their projections are accurate and that the money they are spending is going to come from some tooth fairy working for the Federal Reserve.
These people are shameless.