Health Spending to Rise Even Faster Under ObamaCare


Last year's health care overhaul will make America's total health spending rise even faster than it would have over the next decade, according to new projections from the federal Medicare and Medicaid administration. The annual rise is projected to be slight—about 5.8 percent per year, or 0.1 percent higher than it would have been without the law—but that's only under a couple of rosy assumptions.

First, it assumes that Congress allows physician payments to drop by 30 percent at the end of this year as scheduled. This just won't happen. Republicans in Congress don't want it to happen. Democrats don't want it to happen. The president and the Secretary of Health and Human Services have all indicated that they don't want it to happen. Which means that the scheduled cuts won't occur. 

As Politico notes, it also assumes that health providers and administrators continue to make efficiency gains that may not be sustainable:

In a conference call with reporters Wednesday, [Medicare actuary] Foster said that the report also includes productivity improvements that would slow the growth of spending by 1.1 percent each year, a pace that, "in the long run, it may be difficult to sustain." He added that revenue projections for an excise tax on exceptionally generous employer-offered health plans, slated to take effect in 2018, may be lower than expected.

Nor do the new projections factor in the law's broken long-term care insurance program. 

The projections also omit any financing for the embattled CLASS long-term care program, which has again been targeted for repeal in the debt negotiations and, in any event, is required by law to be paid for by enrollee premiums.

Which is convenient, given that even HHS Secretary Kathleen Sebelius has admitted that the program won't work as currently designed. 


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  1. “Will” rise?

    It already has. Go ask anyone with employer provided health care programs. Premiums went up this year everywhere. Mine essentially tripled so I had to go from a PPO (where my co-pay was low and easy to manage) to a HSA where I am paying triple for everything. The premiums for my HSA are still double what I was paying for a PPO last year.

    Thanks Obamacare!

  2. Look, Obama said that Obamacare would decrease costs and reduce the deficit. Trying to use actual numbers to refute this is cheating.

    Giving away even more stuff for free will cost more?! Who would have thought such a thing?

  3. So, this is today’s “Dog Bites Man” story, right?

    1. The amount of money spent on medical care will exactly correlate with the amount of money available to spend on it. (See, I can play a Keynesian too.) Obamacare makes it a lot easier to get money to spend on pointless medical care, so medical care as a share of GDP will go up.

      No dogs were bitten.

    2. That phrase is in serious need of an update. “Cop shoots dog” is now the least surprising outcome in any given situation, so we should use that.

  4. Our new fiscal year begins this September. Benefits meeting was just last week – the company is looking at a 9% rise in health costs. We’re an 80/20 company (I pay for 20% of my insurance) so I’m looking at less money in my pocket soon.

    1. You gotta spread the wealth around.

  5. So more govt control = less efficiency gains? Holy crap.

  6. As Politico notes, it also assumes that health providers and administrators continue to make efficiency gains that may not be sustainable

    This was one of the biggest weaknesses of that bill, among an embarrassment of riches. If implementing “efficiency” would lead to cost reductions in healthcare, why not just implement those right now rather than wait until 2014?

    Probably because the game’s up regarding the managerial class’s obsession with high-scale “efficiency” and its relative effectiveness.

  7. Let me be clear: I don’t know what the fuck I’m doing. But in my defense, I don’t care.

  8. Last year’s health care overhaul will make America’s total health spending rise even faster than it would have over the next decade, according to new projections from the federal Medicare and Medicaid administration.

    No, they won’t! Once we are all under a single-payer system and have our care rationed, the costs will go down!

    Embalming will go up very quickly, though…

  9. “The annual rise is projected to be slight?about 5.8 percent per year, or 0.1 percent higher than it would have been without the law”

    This article is really misleading.

    .1% is $35B over 10 years or $3.5B/year for all these benefits.

    THIS IS NOT A TYPO – .1% =$35 billion over a decade or $3.5B per year.

    So lets look at the .1% from the perspective of an investment in America and what the ROI of that is:

    30-40 Million Americans with quality health insurance
    300,000 lives will be saved by 2020 as no longer will 45,000 deaths occur annually for Americans without health insurance.
    The cost savings to society and social programs that would support the families of these victims alone will exceed the .1% let alone the human and family benefits
    No American can be turned down for a pre-existing condition. 125 Million have at least one.
    High quality plans for all Americans that will eliminate medical bankruptcies (60% of all today)
    No annual maximums
    No lifetime maximums
    No exclusions/restrictions for pre-ex issues
    Preventive care for all to keep us healthier and reduce long term costs
    State based marketplaces that improve competition and options for small businesses
    Online enrollment, admin, communication in a common format will lower admin costs for businesses
    Allow employers to take advantage of federal subsidies for lower wage workers and contribute to coverage as well
    Insurers must accept electronic data for efficiency
    Consumer protection requirements on insurance companies, regardless of the state:
    Operate at or above 80% or 85% for their medical loss ratios or provide rebates to customers
    This requirement forces insurers to get lean and mean to maximize their profits and streamline operations and connections which will further cut transaction costs downstreamwith consumers, businesses and vendors/payors
    All rate increases be published online for review in a common format in all 50 states, including 10 that do no rate reviews at all today
    All plans use a common format to describe their details to make it easier to understand
    Accountable care organizations will be providing coordinated care for patients reducing duplication, errors and over treatment and using evidence based medicine to improve outcomes and lower costs
    Over 100,000 patients die annually die to improper care. How many will this save?
    This is a partial list of the most obvious ROI for this modest .1% investment or increase in costs over 10 years.
    Thats right .1%! That translates into a few billion dollars a year:
    less than ethanol subsidies, or
    tax breaks for hedge fund managers or
    10% of the cost of oil company subsidies
    none of which add anything to GDP or any ROI for the American people.

    So what is the total ROI for the economy for this .1% investment?

    CBO has never scored a dime of savings from reduced healthcare costs into their projections.

    Nor has anyone put a price tag on the lives saved and the societal costs of lost wages, taxes, social programs for survivors etc.

    Or the really important human costs of children growing up healthier, reduced infant mortality, families not losing loved ones , kids not losing parents et al.

  10. Practice is good for out health

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