Although health care in general and the Patient Protection and Affordable Care Act specifically were but a footnote in Tuesday night’s State of the Union address, President Obama may have raised eyebrows when he claimed that “already, the Affordable Care Act is helping to slow the growth of health care costs.” After examining the numbers and speaking to one health care expert, EBN finds that the president’s claim is not so cut and dried.
In 2011, the first year after PPACA was enacted, health care spending did indeed grow at its slowest level in 52 years, 3.9% to $2.7 trillion, according to the Centers for Medicare and Medicaid Services. This slide is not likely related to PPACA, however, as the decline began in 2008. In fact, lower spending is largely the result of increased cost-shifting to consumers and decreased state government assistance. Before the recession, annual growth was around 8%.
Further, a separate CMS report projects that even after PPACA is fully implemented, U.S. health spending is expected to reach nearly $4.6 trillion by 2019, growing at an average annual rate over the next decade of 6.3%, as opposed to a 6.1% rate anticipated before reform.
By 2019, health care is predicted to account for nearly one of every five U.S. dollars spent or about 19.6% of the gross domestic product, 0.3 percentage points higher than projected previously, CMS economists concluded.
“In the aggregate, it appears that the Affordable Care Act will have a moderate effect on health spending growth rates and the health care share of the economy,” said CMS economist Andrea Sisko.
Paul Fronstin, director of the health research and education program at the Employee Benefit Research Institute, tells EBN that while, statistically speaking, health care costs are indeed growing at a slower rate, “I don’t know that it can be directly attributed to health care reform. The law has so many moving pieces, it would be really hard to parse that out.”
He cites Mercer data from November 2012 that “showed premium growth had slowed to its lowest level in 10 years to about 4.1%.” Still, he says, at the same time “wage growth is about 2%, and overall inflation is about 2%.”
“We really haven’t seen a lot — certainly in the employer market — to suggest that [PPACA] is helping to bring costs down,” Fronstin says. “Now, a lot of the changes don’t kick in until next year — like essential health benefits and rating bands — but even with growth rates slowing, we still have a ways to go to close the gap between cost growth and wage growth. And it’s another thing altogether to actually bring costs down, which is what we all want.”
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5 Comments
Posted by: MARTI | February 14, 2013 5:06 PM
Law is law, now we must deal with it, whether we are the avg citizen, employer, agent, or insurer carrier, or the professional healthcare provider. While there might be distrust between each player, we need to work together to make this happen. While your association reprs meet with CMS HHS and other regulatory Agencies; we all respectively need to form groups who will work together to help enrollment process proceed, allowing sufficient training. Knowledge and skills from each group is necessary. It will be hardest on rural areas where internet is still not available due to towers and man-hour resources will be in short supply. Grid lock between these two political parties is nothing new. At this point, it likely would not matter who sits in the WH. We have a Public Law, like it or not, time to work out a plan to move forward. Moving forward means to feed the citizens information as it develops so they can be ready for decisions.
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Posted by: HansBusley | February 13, 2013 3:29 PM
The scammer in chief is at it again. If you were around in the early 90s when Hillary took reform on there was an industry wide "self policing" affect that brought health cost increases and health insurance premium increases down to about 0% It's way too early to attribute slower cost increases to ACA. Why doesn't anyone, including this publication, address the studies that have been done in various states such as the Millman study in Ohio that projects health insurance premiums to increase 55-85% upon exchange implementation? The Chicago style politics of intimidation of this administration appear to have put a lid on industry leaders (insurance industry exception is Aetna CEO who warned of 50% premium increases).
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Posted by: Di | February 13, 2013 3:08 PM
Are ya kidding me??? NET NNNET why did we do this? For control. Certainly not for lowering costs. Of course if you are Obama, lying in public is OK. Right?
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Posted by: tennisashoe | February 13, 2013 1:43 PM
Considering we employers have complied with mandatory coverage requirements (kids to age 26 and 100% preventive care, etc.), numbers that suggest slowing premium growth sound good to me. Once the cost shifting for covering the un or under-insured population stops, hopefully the rubber will hit the road. If you don't like to give Obama credit, give it to Ted Kennedy and Hillary Clinton.
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Posted by: Abigstaff | February 13, 2013 1:40 PM
What is the dollar equivalence from the average annual rate of 6.3% from the projected 6.1% rate? Does the CMS report show the growth of older workers coming off employer sponsored health plans and enrolling in Medicare, if not, how does this transition impact PPACA? Based on the Mercer data, wage growth and overall inflation .1% of premium growth translates into dollars and the article fails to mention the dollar amount employees save by not paying a higher premium. This article is fair in nature because it lacks pertinent data to make sense of how the State of the Union Address was fact checked.
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