Fueling the Health-Cost Fire

by Grace-Marie Turner

A new government report confirms that health-care costs will go up over the next decade as a result of President Obama’s health-care law. This follows by a day reports that health insurers say they must increase premiums by about 9 percent in the coming year because of the new requirements.

Actuaries at the Centers for Medicare and Medicaid Services (CMS) reported today in Health Affairs that overall health spending will constitute 20 percent of the economy by 2019, up from 17 percent now. An Associated Press article about the report says that “factoring in the law, Americans will spend an average of $13,652 per person a year on health care in 2019. . . . Without the law, the corresponding number would be $13,387. That works out to $265 more with the overhaul.”

That hardly “bends the cost curve down,” as Mr. Obama and his allies in Congress repeatedly promised the law would do. And it does not take the burden of rising health-care costs off the backs of struggling consumers or businesses — again, as they promised.

The White House, of course, is spinning the report a different way. In a blog post today, health-policy director Nancy-Ann DeParle says that people will save an average of $1,310 a year under Obamacare — health spending per insured person will increase to $14,720 in ten years, lower than the $16,120 projected before the law was passed.

But regardless of how one manipulates the numbers, the worst news is in the details. The report assumes that the law’s draconian reduction in Medicare payments to doctors — 30 percent over the next three years — will actually take place. Congress will not let payment rates be reduced to these levels, so health spending will increase further.

In addition, in May, former CBO director Doug Holtz-Eakin reported in a paper for America’s Action Forum that many employers will drop health coverage as a result of Obamacare, sending many more workers than Congress estimated into taxpayer-funded health insurance. He estimates that this will add $1.4 trillion to the cost of Obamacare over the first ten years.

The war of numbers is on.

– Grace-Marie Turner is president of the Galen Institute.