Health Plan Won’t Fuel Big Spending, Report Says

Over 30 million people will gain coverage, and health spending will grow slightly faster than projected under prior law — at an annual rate of 6.3 percent, rather than 6.1 percent, a Center for Medicare and Medicaid Services (CMS) report said. The government report, appearing in the Journal of Health Affairs, by the office of the chief Medicare actuary, undermines the claims of the law’s fiercest critics and some of its biggest champions.

Cuts in Medicare spending, which start in the next few months, and a tax on high-cost employer-sponsored health plans, which takes effect in 2018, will largely offset the cost of expanding Medicaid and subsidizing private insurance for low-income people, said the report, being published online Thursday by the journal Health Affairs.

  • Efforts to extend health benefits to more than 32 million uninsured U.S. residents over the next few years would be a key factor in the increases, the report said.
  • The report also estimated: The overhaul has the potential to control health spending past 2020 if Congress continues to follow the cost controls in the law, because projections indicate a slowdown in spending beginning around 2018;
  • The number of uninsured residents will decline from 56.9 million to 24.2 million by 2019, and about 92.7% of all U.S. residents will be insured, an increase of 10 percentage points than before the overhaul; and
  • Out-of-pocket spending by employees will be higher in 2018, when many businesses are expected to scale back their coverage benefits to avoid the new tax on high-cost health plans.

(Sources: Advisory Board Daily Briefing, http://advisory.com, September 10, 2010; Journal of Health Affairs, http://healthaffairs.org, accessed September 10, 2010)