Life Expectancy Drops First Time Since 1993

The Centers for Disease Control and Prevention (CDC), a federal agency, has reported the remarkable news that U.S. life expectancy has dropped for the first time since 1993. According to Mortality in the United States, 2015 (NCHS Data Brief No.  267, December 2016):

• Life expectancy for the U.S. population in 2015 was 78.8 years, a decrease of 0.1 year from 2014.
• The age-adjusted death rate increased 1.2% from 724.6 deaths per 100,000 standard population in 2014 to 733.1 in 2015.
• The 10 leading causes of death in 2015 remained the same as in 2014. Age-adjusted death rates increased for eight leading causes and decreased for one.

The one death rate which improved was for cancer. So, we are “winning” that war, at least relatively speaking. The entire decrease was for life expectancy at birth. Life expectancy at age 65 was unchanged from the previous year. In other words, children and working-age people are bearing the burden of this decline.

Obamacare Repeal Has Already Begun For Small Businesses

(A version of this column was published by Forbes.)

My previous column suggested the 21^st Century Cures Act, which President Obama signed on December 13, demonstrated Republicans can lead on health reform. Promoted as a pro-innovation bill, the new law will improve the Food and Drug Administration’s regulatory processes; as well as fund Vice-President Biden’s Cancer Moonshot, the National Institutes of Health, and steps to reduce the opioid epidemic.

However, the final version of the bill also included an important payment reform, which takes a small but significant bite out of Obamacare. Tacked onto the end of the bill, section 18001of the 21^st Century Cures Act expands the use of Health Reimbursement Arrangements (HRAs) by small businesses. This is a win for small businesses which were harmed by Obamacare. Indeed, given the overwhelming bipartisan support for the 21^st Century Cures Act, section 18001 could be defined as Democrat politicians’ first real step towards conceding Obamacare needs to be repealed and replaced.

GDP: Health Spending Almost Flat

For those (like me) concerned about how much health spending continues to increase after Obamacare, the third report of third quarter Gross Domestic Product confirmed good news. Although GDP growth was revised up $14.5 billion from the second report, spending on health services was revised downward. It is good to have a breather from the second quarter, which was dominated by growth in health services spending.

Overall, real GPD increased 3.5 percent on the quarter, while health services spending increased only 0.6 percent, and contributed only 2 percent of real GDP growth. Growth in health services spending was also significantly lower than other services spending and personal consumption expenditures (PCE). However, the annualized change in the health services price index increased by 1.8 percent, lower than the price increase of 2.8 percent in non-health services, slightly more than the 1.4 percent price increase in non-health PCE, and non-health GDP.

(See Table I below the fold.)

Obamacare’s Effect on Employers’ Health Costs

The Bureau of Labor Statistics has published a chart showing how health benefit costs among private employers have increased over the past decade. The chart shows health benefits increased from 6.9 percent of total compensation in September 2006 to 7.6 percent last September. The 0.7 percentage point absolute increase is a relative increase of ten percent.

21st Century Cures Act Shows Republicans Can Lead on Heath Reform

(A version of this column was published by Forbes.)

Since the election, there has been a lot of sturm und drang around what the alternative to Obamacare will look like. It looks like we can be highly confident the Republican-majority Congress will repeal Obamacare very quickly starting in January. However, there is some question about what exactly will be repealed.

Last year’s repeal bill, H.R. 3762 repealed Obamacare’s spending and taxes, but not its over regulation of health insurance. Further, Republican politicians have promised not only to repeal Obamacare, but replace it with a better payment system than existed previously. People’s primary concern about the previous system was that people in the individual market could be denied coverage for pre-existing conditions or charged higher premiums as a result of underwriting.

Zeke Emanuel, Obamacare Architect, Visits Trump To Urge One-Term Presidency

Last Wednesday, the Trump transition team disclosed the remarkable news that Ezekiel Emanuel, MD, an architect of Obamacare, was Mr. Trump’s first official guest of the morning. The spokesman demurred with respect to the details of the conversation, but I can guess: Dr. Emanuel was urging Mr. Trump to remain in office only one term, in accordance with Dr. Emanuel’s principle that people should be cut off at age 75.

CPI: Dramatic Drop in Prescription Prices

The Consumer Price Index rose 0.2 percent in November. Remarkably, medical prices were flat overall. This is the third month in a row we have enjoyed medical price relief. Prices of prescription drugs dropped by 0.6 percent. Even the prices of health insurance and hospitalization dropped a smidgeon!

Prices for physician services rose the most, by 0.6 percent, followed closely by other medical professionals (0.5 percent).  

Over the last 12 months, however, medical prices have increased 2.7 times faster than non-medical prices: 1.5 percent versus 4.0 percent. Price changes for medical care contributed 20 percent (one fifth) of the overall increase in CPI.

Many observers of medical prices decline to differentiate between nominal and real inflation. Because CPI is has been low until recently, even relatively moderate nominal price hikes for medical care are actually substantial real price hikes. More than six years after the Affordable Care Act was passed, consumers have not seen relief from high medical prices, which have increased over twice as much as the CPI less medical care since March 2010, the month President Obama signed the law.

(See Figure I and Table I below the fold.)