Health Care Costs Grow Dramatically Slower Than Expected After Obamacare

[DonViejo]

A new report by the Urban Institute analyzing government projections in U.S. health care spending shows that it is growing at even slower rates than what was originally projected with the passage of Affordable Care Act. The study predicts that the U.S. will spend $2.6 trillion less on health care between 2014-2019 than what was initially anticipated when Obamacare was passed in 2010.

“Health care costs have had several years of really historic low spending during the period, so overall, public programs, private spending is all less than we thought it would be,” said Gary Claxton, vice president at the Kaiser Family Foundation. “Each year we see spending going up 3 percent, 2 percent, whatever, and not 5 percent, and because that stuff compounds, when it continues to go up more slowly ... it starts to really add up.”

The study, released Monday, compares what the government anticipates the country will spend on health care through 2019 in its forecast released in 2015 versus what was expected through that period in 2010. The more recent forecast numbers take into account the actual spending from 2013, as well as the legislation passed by Congress in 2015 to permanently fix a major gap in Medicare funding. They also reflect how sequestration, the stunted economic recovery and a Supreme Court ruling that made Medicaid expansion optional for states affected overall health care spending.

-snip-

The latest projections predict U.S. health care spending for the years 2014-2019 will be 11 percent less than what was projected just after the passage of the ACA. The 2015 numbers suggest an increase of $49 billion in health care spending -- including private health insurance, out-of–pocket spending, and other health spending -- than what was predicted the year before, but spending on Medicaid is now projected to be $123 billion less than what was expected in 2014. “Despite the modest increase in projected national health spending since the 2014 forecast, however, the 2015 forecast still reflects a decline of $2.6 trillion from 2014 to 2019 compared with the 2010 ACA baseline forecast,” the report said.

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http://talkingpointsmemo.com/dc/health-care-spending-growth-urban-institute-study

[Igel]

1. You buy the numbers?

First, they're all based on projections. We don't think about the assumptions and take the projections as fact.

The ACA baseline projection producers had no reason to make entirely sound assumptions. The idea is to have high projections because then it's easier to show how great the politicians and necessary their proposals. Nobody outside of researchers are going to have time to dig into all the assumptions.

Now, in 2014 they had to say how great the ACA was. And the assumptions produced low-ball numbers. This is short-term thinking, but there you have the state of America these days. Takes a special kind of person to stop and think, "What should we do, whether I like it or not, even if it causes pain for the next few years, to ensure these results in 10 and 25 and 50 years?" (That kind of person is generally termed "extinct".)

Even now, the spin is this: Yes, we're above the 2014 projections, but LOOK AT THE 2010 PROJECTIONS!!!!

This is a rhetorical field in which after the ACA was passed and more than a year before the first provision took effect health cost increases took a nose dive ... And people lined up around the block to say how the ACA was responsible. They couldn't say how, except, "Well, they're not increasing prices now because they know they won't be able to in two years." (Which sounds exactly backwards to me.) They, at best, only begrudgingly said, "It's the economy, stupid." Because to say the economy sucked would have been to point out that the wonderful projections from the 2nd stimulus only succeeded in meeting the bottom of the range of projections, not the top of the range as advertised during its selling. (Every projection from 2009-2010 that could be checked failed; the only ones that we assume are accurate are those that cannot be checked, such as 'in the absence of the ACA, this is what health care costs will be in 2018.' Given the abysmal record for falsifiable projections, I see no reason to trust unfalsifiable projections.)

[LiberalEsto]

2. Are they including the rate hikes?

This January my daughter's monthly payment jumped almost 20% over the previous year AND she was forced onto a lower level plan.
From what I've been reading, rates will go up a lot next year.