The Obama administration's own financial experts have estimated that the recently passed Patient Protection and Affordable Care Act will increase — rather than cut — overall medical expenses. During presidential campaign, Obama had sold his healthcare reform package as (in the words of his campaign website) providing "lower costs to make our health care system work for people and businesses." But that's not the healthcare package Obama delivered as President.

The administration's chief actuary of the U.S. Centers for Medicare and Medicaid Services concluded that although the bill would accomplish Obama's goal of increasing overall healthcare insurance coverage, it would also increase overall healthcare spending even more than the increases expected in the then-current law:

Total national health expenditures in the U.S. during 2010-2019 would increase by about 0.7 percent. The additional demand for health services could be difficult to meet initially with existing health provider resources and could lead to price increases, cost-shifting, and/or changes in providers’ willingness to treat patients with low-reimbursement health coverage.

Chief Actuary Richard S. Foster concluded that while the new law would amount to “raising projected spending by about 1 percent over 10 years,” he also concluded that many of the “cuts” in the bill were not realistic: “That increase could get bigger, since Medicare cuts in the law may be unrealistic and unsustainable.”

Republican opponents to the law were hardly astonished at the prospect that more federal control over health care would increase costs. "A trillion dollars gets spent, and it's no surprise — health care costs are going to go up," Rep. Dave Camp (R-Mich.) told the Associated Press.

Foster's study assumes insurance exchanges created by the bill will cut the costs for many customers, though not enough to reduce overall costs. But even that analysis may be too optimistic. Massachusetts has had a healthcare insurance exchange in place for four years already, has the highest insurance costs in the nation and has yet to see any cost savings. Foster's analysis assumes that the additional 33 million Americans would increase costs, but some of these increased costs would be offset by insurance exchange rate cuts:

The availability of coverage would typically result in a fairly substantial increase in the utilization of health care services, with a corresponding impact on total health expenditures. These higher costs would be partially offset by the sizable discounts imposed on providers by State Medicaid payment rules, as well as the significant discounts negotiated by private and public health insurance plans.

Foster qualifies these “savings” in his study by stating that  “the responses of individuals, employers, insurance companies, and Exchange administrators to the new coverage mandates, Exchange options, and insurance reforms could differ significantly from the assumptions underlying the estimates presented here.” In other words, the cost increases as a result of Obama's health care legislation may be even larger than Foster estimated.

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Nick said:

Idiot This analysis is of an amendment back in November, which is not what was passed. The pdf you linked is from Dec 2009. Also, it states that not all aspects was analyzed ("We have not estimated the impact of the various tax and fee proposals or the impact on income and payroll taxes due to economic effects of the legislation"). Don't report misleading information.

April 23, 2010

Michael said:

... DUH! Well we will just fix that with a VAT. Then we will have another insidious regressive tax imaginable.

April 23, 2010

ToldYouSo said:

Hey Nick - Why not? After all, that's what the Democrats do all the time! Talk about idiots!!

April 23, 2010

Old Data said:

Article Not Valid The title of the analysis you're basing your article on is: Estimated Financial Effects of the “Patient Protection and Affordable Care Act of 2009,” as Proposed by the Senate Majority Leader on November 18, 2009. Really, you have no more recent analysis of, say, the bill that was ACTUALLY passed?

April 23, 2010

captainkona said:

LOL! Good job, Nick. Looks like Mr. Eddlem would be better off with a nice comfy job at McDonald's.

April 23, 2010 | url

Car said:

... Hey ToldYouSo both Dems and Repubs lie through their teeth daily, difference is all you right wingers believe the lies and perpetuate them. Try a little more objective approach, do some research of your own, and figure it out. Don't get down on Nick for providing facts that contradict this fictional story...

April 23, 2010

lilie mantle said:

lollopop

April 23, 2010

Author Comment said:

Nick's "Idiot" analysis must have been self-identifying Yes, the report is from last November and it is an analysis of the House version of the legislation. And Nick WOULD HAVE HAD a point if any of the relevant provisions had changed from the House-passed version to the final version. As it happens, none of them have. Yes, there was some tinkering around the edges, but the essential numbers remained the same. Of course, if Nick probably knew this. Had he known that there were updated figures (there aren't, and I wonder why??) that would have proved the HHS study wrong, I'm sure he would have posted the link. But he didn't because he really didn't care about the truth; he just thought (and I'm being generous here, calling it that) he could knock down the HHS analysis and appear to make a relevant political point. I wrote the story because the Medicare and Medicaid Services study went virtually unreported until the AP picked it up today. I thought it was, and is, a revealing story. So.... What Nick claims to be an explosion and resulting smoke cloud that destroyed the edifice of my story is nothing more than a smokescreen that reveals -- once the smoke has been blown away -- that the structure of the story is left standing without a scratch.

April 23, 2010

OHite said:

1% costs increase in the next decade for how many % more care and coverage to Americans? So healthcare costs are set to expand a whole 1% over the next decade, to expand coverage dramatically... And the problem is?

April 23, 2010

OHite said:

... To make my comment more directly: We are basically expanding coverage and care AT NO COST. Yes, its true, Obama wanted to expand coverage and reduce overall costs simultaneously, and instead it seems all that new care will result in "Total national health expenditures in the U.S. during 2010-2019 would increase by about 0.7 percent." Sounds like a bargain to me, certainly care and coverage are expanding by a lot more than .7%.

April 23, 2010

biodiesel chemicals said:

... You're expanding coverage to people who don't need it like me. We get on board, and pay the bill of the others who are going to the doctor. How can costs go up in that scenario unless you assume I'll start going to the doctor just because I have to pay for it in advance? Ha, you can bet I will be. My family has a "back problem" and two uncles have been living on welfare for 20+ years now because of that lame excuse. I have no issues, but the family history is enough to get a doctor to prescribe me to 3-4 nights of massages for my own pleasure. Force me to pay for a meal plan to a buffet, and I will eat everything I can. I'm not going to just pay for it and go about my business regardless of whether I'm hungry or not. I will drive your healthcare costs up attempting to get my money's worth.

April 23, 2010 | url

Gretchen said:

For those still believing the President... Obama said it would use half a trillion out of Medicare and, at the same time, expand Medicare's solvency by a decade - lie - only if you double count - see last paragraph of page 2 of CBO letter @ http://www.cbo.gov/ftpdocs/108...unting.pdf And they started another Ponzi scheme - CLASS - were they used $72 billion in premiums to 'reduce' the deficit - benefits paid out later will be added to debt. Not to mention that it collects taxes for 10 years and pays benefits for 4-6 years. For those criticizing the author - the reports are based on the Manager’s Amendment of the Senate bill that was changed only through the 'reconciliation' bill - the link above is correct. The changes only made it worse.

April 24, 2010

joshua said:

Health spending in U.S. nears $1.9 trillion a year, more than $5 billion a day @ nick, Do you even know what 0.7 percent of one tillion dollors is? Do you? I bet you don't. Just so we are all on the same page, thats 7 Billion Dollars. Does not sound like a deal to me.

April 25, 2010