Health Care Reform:

Reform Law to Slightly Boost Health Spending by 2019

Sept. 10, 2010 -- President Obama’s controversial health care reform law will have only a modest effect on the nation’s overall medical bills by 2019, according to government estimates released Thursday.

Overall spending on health care will make up 19.6% of the country’s total economic output by the end of the next decade. That’s actually 0.3 percentage points higher than it would have been if the Affordable Care Act was never enacted, according to actuaries at the federal Centers for Medicare and Medicaid Services (CMS).

The report suggests that the growth of the nation’s medical costs -- at least in the first decade -- is unlikely to slow as the reform bill’s supporters predicted. But it also means tens of millions of Americans who don’t have coverage now will eventually have it, without the exploding costs predicted by some critics.

“What we show is that the impact (on overall health costs) is moderate,” said Andrea Sisko, an economist in the National Health Statistics Group at CMS.

About  33 million Americans who have no coverage now will have it by the end of the next decade, the report predicts. And health care will stay expensive to the country’s bottom line. By 2019, overall health care costs are expected to hit $4.6 trillion, up from $2.6 trillion this year, it states.

A Closer Look

While the nation will spend a lot more to cover more than 30 million new people, the growth in the Medicare program for the elderly and disabled will slow way down.

Health care spending in both the government and private sectors is expected to spike shortly after 2014, when the Affordable Care Act’s expanded coverage provisions begin to take effect. Millions of people are expected to use a combination of taxpayer and private money to buy new coverage on insurance exchanges designed to help individuals pool their risk and control costs.

But economists predict that after the 2014 spike, costs then level off. By 2019, costs would grow close to 1 percentage point more slowly under the reform law than without it, they say. At the same time, total growth in out-of-pocket spending on things like insurance premiums, co-pays, and deductibles is projected to slow 1.1% in 2014. Without the new law, those costs would have gone up 6.4%, according to the report.

Many Republicans are now campaigning for the November elections with pledges to try to repeal the health care law.

Assuming the law stays in effect, how good a job it does controlling costs beyond 2019 remains an open question.

In an interview, Rick Foser, Medicare’s chief actuary, said the Affordable Care Act has many provisions designed to improve preventive care, lower administrative cost, and cut waste beyond 2019.

“The building blocks are there, we just don’t know how effective it will be,” he said.