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January 08, 2014 10:46 AM The Elephant in the Room on Health Care Costs

By Ed Kilgore

There is a vibrant and sometimes angry debate well underway both in the popular political media and in Wonkland about the connection between the implementation of the Affordable Care Act and the data indicating a significant slowdown in health care cost inflation. For example: Jonathan Chait wrote a column yesterday defending the proposition that Obamacare has something to do with this beneficent trend, and addressing at least one conservative dissenter’s arguments.

As a supporter of the Affordable Care Act, I naturally hope that Chait is right, and that ACA has at least restrained, if not tamed, the beast of health care inflation, with its many baneful effects on the economy and the federal budget. But it’s worth noting that even at today’s currently limited levels, the cost of health care is still outstripping wage growth, which means it is taking a bigger gulp each year from the stagnant pool of middle-class incomes.

More importantly, as discussed at length by Phillip Longman and Paul Hewitt in “After Obamacare,” an important essay in the January-February issue of the Washington Monthly, the Affordable Care Act does not adequately address the primary engine of future health care cost inflation, the rapid consolidation of health care providers, especially hospitals, which could unleash a whole new cost spiral. Dealing with that issue will require a new regulatory regime for providers, and a commitment to antitrust enforcement in this area, that are beyond the scope of Obamacare but within the authority of the federal government. It’s time both sides in the debate over Obamacare came to grips with this reality.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

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