CMS Actuaries: Obamacare Increases Costs

CMS Actuaries: Obamacare Increases Costs

Loren Heal

Loren Heal (loren.heal@gmail.com) is a research programmer at the University of Illinois at Urbana-... (read full bio)

Contrary to claims made by the Obama administration during the fight to pass the Patient Protection and Affordable Care Act (PPACA), government actuaries are now predicting President Obama’s law will result in increased costs, instead of lowering them.

In a study released in Health Affairs, actuaries from the Centers for Medicare and Medicaid Services (CMS) expect an annual increase in health care spending from 2010-2019 of 0.2 percent over estimates made before passage of the PPACA. They also predict spending will reach $4.6 trillion in 2019, for an average annual growth rate of 6.3 percent during that time.

‘Doc Fix’ Seen as Key

The study authors place blame for the growth in cost on changes made to COBRA premium subsidies and especially to the so-called doc fix, in which cuts to Medicare physician payments are regularly postponed by successive Congresses. Unlike calculations made by the Congressional Budget Office, the authors based their projections on the assumption the doc fix will not to occur in 2011. If the planned 23 percent cuts to Medicare physician payment rates due in December of 2010 are not postponed, health care spending would not increase as much.

Jeffrey Anderson, senior health care fellow at the Pacific Research Institute, notes the problems are larger than that.

“Medicare's chief actuary previously estimated that America's health costs would rise more with ObamaCare than without ObamaCare,” Anderson said. “The culprit isn't just the ‘doc fix’ but rather ObamaCare's myriad of regulations and mandates. Simply put, when you reduce competition and choice and reduce people's ability to control their own health-care dollars, prices rise.”

Robert Moffit, a senior fellow at the Heritage Foundation in Washington, DC, says it is extremely likely Congress will continue to pass successive “doc fixes” every year.

“They would have to reverse all of their previous experience. Since 2003, they have basically never allowed the payment formula to go fully into effect,” Moffit said. “I can’t imagine the Congress allowing a 23 percent cut in Medicare payments to physicians.”

Money for Middlemen

Without the political will to tolerate cuts, the PPACA pricetag will explode, says Anderson.

“Many of ObamaCare's projected cuts to other Medicare providers almost certainly won't materialize either, because if they did, then—as the Medicare chief actuary points out—they'd likely put a great many Medicare providers out of business,” Anderson said. “ObamaCare will raise health care costs, and federal spending, by even more than projected.”

According to Anderson, in PPACA’s first decade of full enforcement, from 2014 to 2023, it will redirect more than $1 trillion from taxpayers to insurance companies, through the federal government.

“That approach entrenches the roles of not just one but two inefficient middlemen,” Anderson said. “Moreover, it would mandate higher and more costly benefits before the inevitable rationing to follow, whether people want them or not. Such mandates are already—predictably—causing insurers to raise their premiums.”

Loren Heal (loren.heal@gmail.com) writes from Neoga, Illinois.

 

Internet Resources:

Health Affairs: National Health Spending Projections: The Estimated Impact Of Reform Through 2019

http://content.healthaffairs.org/cgi/content/full/hlthaff.2010.0788v1

Loren Heal

Loren Heal (loren.heal@gmail.com) is a research programmer at the University of Illinois at Urbana-... (read full bio)