A new report from the Medicare Office of the Actuary estimates that “health spending will grow by an average of 5.8 percent a year through 2020, compared to 5.7 percent without the health overhaul.” As a result, the nation is expected to spend “$4.6 trillion on health care in 2020, nearly double the $2.6 trillion spent last year”:
In 2014, when the major coverage expansions of the health law begin to take effect, national health spending is expected to grow 8.3 percent, according to the new analysis. But spending growth should return to its 6 percent historical average from 2015 to 2020 as some employers drop coverage and the so called “Cadillac tax” on high-cost insurance plans takes effect in 2018. “The effect is likely to be a slowdown in the growth of health services, health insurance premiums and health spending overall,” the study said.
Election-centric Orrin Hatch is already out with a statement claiming that reform makes “sky-rocketing healthcare costs worse,” but he would be well served to read the report more closely. CMS is saying that the law expands coverage to 30 million Americans while increasing the average annual growth in national health spending by just 0.1 percentage points over 10 years and predicts that expenditures will fall as cost-controls like the excise tax decelerate health care spending over the long haul. That’s a good deal that establishes a more sustainable and stable health care system, and it will likely only improve as provisions like the Independent Payment Advisory Board (IPAB) kick into higher gear. The report also found that in 2014, “out-of-pocket spending is projected to decline 1.3 percent, largely as a result of the uninsured attaining health coverage through Medicaid or health insurance exchange plans.” Overall, “out-of-pocket share of national health expenditures is projected to fall from 12 percent in 2009 to 9.6 percent in 2020.”
The CMS projections may also underestimate the savings from the delivery reforms and productivity adjustments — which will encourage providers to deliver quality care more efficiently. Those kinds of changes have led to real savings in the Geisinger Health System, Health Partners, Denver Health, and if properly implemented, could result in larger reductions in national health care spending than what the actuary is predicting.