Hawking the Affordable Care Act (ACA) six years ago, President Barack Obama said, “Every single good idea to bend the cost curve and start actually reducing health care costs [is] in this bill.”
Team Obama projected that their version of health care reform—replete with the bells and whistles of “investments” in health information technology, health care delivery and payment reforms—would translate into big cost reductions for individuals, families and businesses. In his iconic health care “talking points”, the president said that the “typical” family would see a yearly $2500 savings in their health costs.
Has Obamacare Reduced Costs?
Those family cost savings, of course, have not materialized.
In year six, even with lower than anticipated enrollment in the health insurance exchanges and the refusal of 21 states to participate in the law’s Medicaid expansion, the health care cost curve is still on an upwardly mobile trajectory.
It is fueled by sharp increases in both public and private health care spending.
Centers for Medicare and Medicaid Services data show that total per capita health insurance spending will rise from $7,786 in 2016 to $11,681 in 2024. Looking at the future of employer-based health insurance costs, the Congressional Budget Office (CBO) projects that job-based premiums are poised to increase by almost 60 percent between now and 2025.
Obamacare’s cheerleaders have allowed their exuberance to outrun their supply lines. Medicare trustee Charles Blahous best summarized the problem:
“Given how the ACA’s advocates touted the law as ‘bending the cost curve down and reducing the deficit’ while occasionally in the same sentence crediting it with expanding coverage to ‘more than 94 percent of Americans’, many Americans could be forgiven for not understanding that those two goals were in conflict.”
Obamacare cannot deliver the impossible (even if it were good public policy— and it isn’t).
The True Costs of Obamacare
Courtesy of the Affordable Care Act, public spending is outpacing private spending. For 2015, the Congressional Budget Office reports that the federal government spent a total of $936 billion on health programs (for example, Medicaid, Medicare, and the Affordable Care Act), a 13 percent increase over the 2014 level.
For 2015, the Congressional Budget Office reports that Medicare spending increased almost 7 percent, the fastest rate of growth since 2007; and, over the period 2013 to 2015. They also report that Medicaid spending alone jumped by 32 percent.
Bigger Government Does Not Make Healthcare Cheaper
Medicaid is the fastest growing component of America’s poorly performing welfare state. Many Affordable Care Act advocates applaud the government’s increasing role in American health care as an indisputably good thing, but that does not bend the notorious “cost curve” downward. Nor does it guarantee value for the dollars expended, even if, as the president says, the Affordable Care Act has incorporated “ every single good idea” to do so.
Health care delivery and payment reforms—value based purchasing, pay for performance, accountable care organizations (ACOs)—are among several strategies enacted in the Affordable Care Act to bend the cost curve downward.
But in 2010, the Congressional Budget Office declared that most of these initiatives would have little if any effect on health spending.