The New Health Dialogue

A Blog from New America's Health Policy Program

COST: New Report, Same Old Story

Published:  September 9, 2010
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New numbers on United States health care spending came out today from the CMS Office of the Actuary. The new estimates are updated to reflect the new health care reform law and a couple other relevant pieces of legislation. The full report, National Health Spending Projections: The Estimated Impact Of Reform Through 2019, is available from Health Affairs (subscription required).

The report has critics of the PPACA on the offensive and proponents of the law on the defensive, but ultimately, the projections aren’t that shocking. The CMS Actuaries predict that national health spending will be 0.2 percent higher and the share of health spending as a percent of GDP will be 0.3 percent higher by 2019 than they predicted in their February report.

“In the aggregate,” Andrea M. Sisko, a CMS economist and the principal author of the report, told the New York Times, “it appears that the new law will have a moderate effect on health spending growth rates and the health care share of the economy.”

When thinking about these numbers, it's important to remember the cost of doing nothing on health care. Without reform, costs will continue to rise for everyone, coverage would erode, and care quality would remain inconsistent. With reform, new pilot programs will start to find innovative ways to improve health care quality and delivery. Even more significantly, 32 million more people will gain affordable health insurance coverage, mostly through Medicaid eligibility expansion and subsidies to help them purchase insurance in an exchange. As the report shows, over the next decade, spending in the private insurance market and Medicaid spending will increase, while Medicare spending will decrease. We know any spending increase sounds like a bad thing -- but it's better than significantly more spending with no coverage expansion. Also, over at the White House Blog, Nancy-Ann DeParle points out the report also predicts that out-of-pocket health care spending will decline by about six percent for the average consumer.

When we talk about controlling health care costs, we use the phrase “bending the cost curve” because we don’t expect short term health costs to go below current levels right away. The goal is to stop health costs from growing out of control, and to get more value from our health care dollar. If we can successfully implement health reform, we’ll be on our way to making sure all Americans can get high quality, sustainable, affordable care. It might not cost less than what we're spending right now, but it’s better than the unreformed alternative -- lower quality health care, millions of people who can’t afford to see a doctor, and even higher costs.

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