This week we are digging into the 2014 healthcare spending report. Click here for part one.
When you can apply the same concept to both sports smack talking and the month end financial reporting, you’ve got real versatility.
Good results need little commentary; bad news requires analysis, charts, footnotes, plans and promises.
‘Revenue was ahead of plan, profitability was ahead of plan, and cash is strong. Any questions? No. Adjourned.’
Good news does not need spin. Explaining away poor results takes a little longer.
Healthcare spending in 2014 was up 5.3% compared to 2013. Was that good or bad?
Well, let’s just say no one simply pointed to the scoreboard and walked away. Cue the analysts and explainers.
During the last five years, we averaged a relatively low 3.7% annual growth rate in healthcare spending. The Administration has taken credit for this slower rate, but really, they should give George W. Bush the trophy since he caused the recession and the recession is the primary reason that spending slowed.
Though the ACA was passed in 2010, most of the significant provisions of the Affordable Care Act went into effect in 2014. And it 2014, costs went up 40% more than in recent years.
Analysis, we need more analysis.
Defenders of 5.3% as being a good number note that costs went up because we got more people insurance coverage. That is a good thing, right? I thought that getting people insurance would get them out of the expensive ER and that would bring costs down?
One of the best ways to look at this is to compare how the growth of healthcare spending per capita to income per capita. That neutralizes the effects of both inflation and population growth and gives us a pretty straightforward look. What does that metric tell us?
From 1970-2006, healthcare costs outstripped personal income by 2.4% a year. That is huge, and over almost four decades, that adds up to our current crisis. Recently, healthcare costs have grown at about the same rate as personal income, which is very little on both fronts. Thanks, Mr. Great Recession, thanks.
How was 2014? According to the Internal Monetary Fund, US incomes rose 3.3%. Healthcare per capita was 4.5%. A little quick math says that is one is a lot bigger than the other.
Charts! We need charts! And footnotes. Footnotes would be good.
OK, tomorrow we’ll drag out the footnotes and explain what was behind the not-so-rosy 5.3% spending increase.