Sept.
9, 2010 - The health overhaul legislation and other changes made by
Congress and regulators since February will have only a "moderate"
effect on the nation's health tab through 2019, government economists
say in a new study.
In all, the changes will increase annual growth in
health spending by about 0.2 percentage points on average, bringing the
rate to 6.3 percent, said the economists, who are members of the Office
of the Actuary at the Centers for Medicare and Medicaid Services. Their
findings were
published today in the journal Health Affairs.
National Council on Aging launches educational
campaign after finding even among older adults who considered themselves
familiar with the new law, correct answers were 'few and far between'
For older people: expanded Medicaid, coordinated care
for Medicare-Medicaid patients, help for employers to insure early
retirees, FDA can approve cheaper drugs
The economists' conclusions conflict with the
claims of Republicans who said the Democratic health law would unleash a
steep climb in health spending.
But, they also draw into question President Barack
Obama's contention that people who like their plans can
keep them: though the impact on spending is modest, the analysts
foresee an array of changes in insurance industry and employers'
offerings.
"The effects on health spending are moderate," said
Andrea Sisko, the lead author of the report, "but the underlying effects
on coverage are more pronounced." That means health insurers will offer
different types of plans or cancel current offerings, some workers will
likely shoulder more costs, and millions of otherwise uninsured people
will have coverage.
The health law and other changes would, by 2019,
the latest year projected, increase health spending as a share of the
economy by only 0.3 percentage points, to 19.6 percent of GDP. Though
the increase is modest as a percentage, the overall rise in the nations
health spending -- including both government and private expenses --
will rise by $617 billion between now and then, the economists said. In
2019, health spending is expected to total $4.6 trillion.
Their predictions include the impact of the health
law as well as the costs of delaying a scheduled
21 percent cut to physician Medicare pay, the
extension of subsidies for people who retain employer coverage after
losing their jobs, and a change in how drugs physicians administer are paid
for by Medicare. The drug change alone was responsible for more than
$140 billion of the increased spending.
In a conference call with reporters, the economists
said their projections focus on the entire health system, rather than
just federal spending, which is the Congressional Budget Office's
domain. They also said they were not able to isolate the costs of the
overhaul, known as the Affordable Care Act, from other legislative and
regulatory changes.
Richard Foster, Medicares top actuary, who was not an author of the
report, noted in a press conference Wednesday that the projections did
not deviate that much from the CBOs estimates.
Paul Ginsburg, president of the Center for Studying Health System
Change, has cautioned that many of the changes the CBO and Office of the
Actuary attempt to predict may not come to pass because theres a dearth
of evidence. When both offices drafted predictions for the 2003 Medicare
drug law, for instance, they were off target by tens of billions of
dollars.
The economists also offered these predictions:
-- New health insurance exchanges for individuals
and small businesses could see an influx of 16 million people in 2014,
and up to 30 million by 2019. Foster said individually purchased private
insurance plans may cease to exist as a result.
-- By 2018, after a spike in the growth of health
spending resulting from an expansion of insurance coverage, spending
should begin slowing. One big reason is that the so-called Cadillac tax
on high-cost insurance plans will kick in. The economists expect
insurers and employers to shift more costs to policyholders to avoid the
tax.
-- Around 100,000 fewer people will have
employer-sponsored coverage by 2019 because more people will be shifted
to Medicaid or the exchanges than will gain coverage in that market.
-- The administrative costs of implementing the
overhaul will total up to $37.7 billion, money that will be spent
largely on setting up state-run insurance exchanges.
The New York Times: "The government report, by the office of the
chief Medicare actuary, undermines the claims of the law's fiercest
critics and some of its biggest champions." Critics had said the
overhaul would fuel explosive health spending growth; supporters, that
it would curb the already exploding trend.
It will do neither, Medicare's economists say. "In
2009, the report said, national health spending, public and private,
totaled $2.5 trillion and accounted for 17.3 percent of the economy, as
measured by the gross domestic product. The report predicts that health
spending will rise to $4.6 trillion and account for 19.6 percent of the
economy in 2019." That's up from $4.5 trillion that year, according to
an earlier estimate by the same economists (Pear, 9/9).
Los Angeles Times: "By 2019, nearly 93% of the population is
projected to have medical coverage, compared with about 84% now. Without
the law, the percentage of people with coverage was expected to dip to
83% over the next decade, according to the report." Karen Davis, the
president of the Commonwealth Fund, tells the LA Times, "When you cover
the uninsured and they get the care they need, you have to spend more
money," in explaining the rise in overall spending. But, that spending
is largely offset by savings in Medicare (Levey, 9/9).
Reuters: The government researchers predicted a surge in demand for
health services in 2014 as most of the overhaul provisions kick in. As
many as 16 million people will join health insurance exchanges that
year, with up to 30 million joining by 2019. A rise in Medicaid
enrollment will also occur in 2014. But, cuts to Medicare Advantage will
slow spending growth during the period. The so-called Cadillac tax on
high-cost health plans could cause companies to shift more costs to
employees, too (9/9).
The Wall Street Journal: The report "casts fresh doubt on Democrats'
argument that the health-care law would curb the sharp increase in costs
over the long term, the second setback this week for one of the party's
biggest legislative achievements." On Wednesday, the Journal had
reported that insurers were attributing up to 9 percent premium
increases to new requirements in the health law. However, the "White
House said the law will lower costs for insured consumers by removing
the hidden price they pay to subsidize the uninsured" (Adamy, 9/8).
The Associated Press: "The new bottom line is guaranteed to provide
ammunition for both sides of a health care debate that refuses to move
offstage. Republicans are vowing repeal if they win control of Congress
this fall, although they are unlikely to have enough votes to override
an Obama veto." According to the AP, the average per capita cost of
health care in 2019 will be $13,652, including the addition of the
overhaul. That's $265 more per person than without the overhaul (Alonso-Zaldivar,
9/9).
In a blog post, however, the White House contended
that, if the math included only people with insurance coverage, the
per-person cost of care actually would go down. White House health czar
Nancy-Ann DeParle wrote on the
White House blog, "Specifically, by 2019, overall health spending
per insured person will average $14,720 instead of the $16,120 projected
by the Actuary before the Act was enacted into law. This is great news
for many Americans" (DeParle, 9/9).
Sept.
9, 2010 - The health overhaul legislation and other changes made by
Congress and regulators since February will have only a "moderate"
effect on the nation's health tab through 2019, government economists
say in a new study.
