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Health Spending Rise To Steepen, Modest Bump From ObamaCare

From the abstract:

In 2010, US health spending is estimated to have grown at a historic low of 3.9 percent, due in part to the effects of the recently ended recession. In 2014, national health spending growth is expected to reach 8.3 percent when major coverage expansions from the Affordable Care Act of 2010 begin. The expanded Medicaid and private insurance coverage are expected to increase demand for health care significantly, particularly for prescription drugs and physician and clinical services.

This from NPR's Julie Rovner:

A fresh analysis of the nation's health spending suggests that over the next 10 years, the Democrats' Affordable Care Act will boost the number of people with health insurance by about 30 million, while health costs overall will rise by only one-tenth of a percentage point more than they would have if the law hadn't passed. Let me repeat: one-tenth of a percentage point!

Now if that finding came from some left-leaning group, people might just shrug and go on about their business. But it's published in the peer-reviewed journal Health Affairs and it's the considered opinion of the Office of the Actuary at the Centers for Medicare and Medicaid Services. That's not a group that's been particularly kind to the health law. In fact, the federal actuary office's original analysis of the impact of the ACA had been one of the main weapons Republicans have used to accuse the measure of costing more and doing less than the official estimators at the Congressional Budget Office.

And from our excellent local Managing Healthcare Costs blog:


Health Affairs published the 2011 CMS Actuary projections of health care cost growth over the next ten years, and there are some important observations. As the report points out, these are projections – and the model has to make a series of assumptions, many of which are dependent upon the overall economy, changes in legislation and regulation, and provider reactions to payment reform.
Some of the conclusions:
· The total spending on health care will almost double between 2008 to 2020, from $2.4 trillion to $4.6 trillion.
· Health care overall will increase at a rate about 1% faster than GDP growth.
· Health care now represents 17.6% of the GDP, and will grow to 19.8% of the GDP by 2020.

See the full entry — and get to know the blog — here. On the effects of ObamaCare, it says:

· The impact of the Affordable Care Act is negligible until 2014, when there is a one-year bump in medical inflation due to the large number of Americans who will receive insurance
· There are many “winners” in the 2014 payment bump:
· Prescription drug spending would increase by 10.7%, more than double the increase without the ACA
· Physicians (8.9% bump, about 1/3 increase)
· Hospitals (7.2%, just a 1% increase, since many of the newly-insured are healthier than those who were habitually uninsured.

The total cost of increase in coverage is relatively modest, although I suspect both supporters and opponents of the Affordable Care Act will cite this study to support their point of view. The pressure to constrain future growth in health care costs will continue unabated.

The American Medical Association's Medpage Today covers the study here, focusing largely on its implications for doctors. It adds:

The Obama administration applauded the report.

"The bottom line from the report is clear: more Americans will get coverage and save money and health expenditure growth will remain virtually the same," Nancy-Ann DeParle, White House Deputy Chief of Staff, wrote on the White House blog.

But she said the report didn't provide a complete picture because it didn't include certain ACA provisions that are indirectly expected to save millions of dollars, including a prevention initiative aimed at reducing hospital-acquired conditions and hospital readmissions, as well as bundled payment programs and support for accountable care organizations.

This program aired on July 29, 2011. The audio for this program is not available.

Carey Goldberg Twitter Editor, CommonHealth
Carey Goldberg is the editor of WBUR's CommonHealth blog.

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