The national focus on reducing health care spending while providing coverage to more Americans is working. A key contributor to that trend: the Patient Protection and Affordable Care Act.
The latest evidence comes from a Robert Wood Johnson funded analysis of federal health spending increases. The study indicates Americans will spend $2.5 trillion less on health care between 2014 and 2019 than was forecast in 2010.
The analysis considered data from the Centers for Medicare and Medicaid Services, which has been attempting to project health care spending trends to determine how well the efforts to reduce increases are working.
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The foundation's analysis differed from CMS's in that the agency "does not seem to attribute any of the reduction in projected expenditures to the effects of the ACA," the foundation said in its report.
Yet CMS does offer lower projections for costs associated with PPACA implementation and operation, leading RWJ to draw a different conclusion from the same data.
For instance, CMS forecasts a much lower overall cost of implementing the PPACA, and a reduced price tag for rolling out Medicaid expansion. These certainly will be among the factors contributing to the lower projections, the foundation says.
Further, the foundation believes there are: "Components of the ACA not included in the CMS projections could result in even lower future expenditures than in the current forecast."
It lists three such factors:
- Premiums in marketplaces that "are well below expectations (due to strong competition, intense negotiations on provider payment rates, and narrower networks);
- Medicare payment constraints likely will continue to put the brakes on increases in that costly realm, which would mean CMS's projections for Medicare spending are still too high;
- The plethora of high-deductible, narrow network products offered via employer plans have contributed to lower spending growth patterns "and they are likely to continue shifting their plans in this direction."
"The net effect is that the $21 trillion estimate of national health spending for the 2014–19 period could be an overestimate," the report states.
The study had several other key findings that support its position that the PPACA is contributing to the slower growth in health care spending:
- The PPACA reduced Medicare payments, established a managed care competition framework in the marketplaces, and imposes an excise tax on high cost health plans beginning in 2018.
- The projected cost of expanding Medicaid under the ACA is now $94 billion less than the forecast made at the time the PPACA became law.
- The projected cost of providing subsidies to consumers to help purchase health plans in the marketplaces is now $125 billion lower than the forecast made at the time of the PPACA's passage.
"The most recent health spending projections are significantly lower than those made immediately following the passage of the ACA, in large part because of historically low growth in health spending since the recession, but also because the projected cost of implementing the ACA is now lower than originally anticipated," the foundation's report said. "Furthermore, the current projections may still be high, given that premiums for health plans offered in the marketplaces are much lower than experts originally thought they would be.
"Thus, while the exact impact of the ACA cannot be determined, it is clear that the nation has successfully expanded coverage and is now expected to spend considerably less than anticipated even before the law was enacted."
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