Healthcare Business News
Richard Foster, CMS actuary

Reform law won't bend cost curve, CMS accountants say

By Rich Daly
Posted: July 28, 2011 - 3:00 am ET

The Patient Protection and Affordable Care Act will not “bend the cost curve” of national healthcare spending over the coming decade, according to the latest projections by the CMS' accountants.

The growth in nation's overall healthcare spending is expected to accelerate from a low of 3.9% in 2010 to a high of 8.3% in 2014, according to the latest annual healthcare spending projection by the CMS actuary's office, which was published Thursday in the online version of the journal Health Affairs. Annual increases will drop to 6.2% by 2020.

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“Many people would argue, and I'm one of them, that this law hasn't had a very significant effect in bending the cost curve in any direction,” Richard Foster, CMS actuary, said in an interview Wednesday following a news conference on the report.

Advocates of the 2010 law, including President Barack Obama, have repeatedly claimed it would slow the rise of ever-higher healthcare costs, critics of the law noted when the CMS report came out.

“Simply put, this report states the obvious that Americans have known for more than a year—the $2.6 trillion law only makes the fundamental problem of sky-rocketing healthcare costs worse,” Sen. Orrin Hatch (R-Utah) said in written statement to Modern Healthcare.

Overall healthcare spending is projected to nearly double from $2.6 trillion in 2010 to $4.6 trillion in 2020.

In addition, a shrinking share of those future spending increases will go to hospitals, according to the report.

For instance, in 2014—when a healthcare-wide burst in spending is expected because of provisions in the healthcare law—the report anticipated hospital spending would barely grow faster than it would have without the law, while physician and pharmaceutical spending will grow significantly faster. The authors of report credited the swing in spending to an expected drop in the number of people seeking uncompensated emergency department care and a commensurate increase in office-based physician care, as 30 million people gain insurance coverage by 2020.

The spending increases will come as an estimated 13 million employers drop insurance coverage for their workers, 11 million of whom are expected to regain coverage through either Medicaid or new state insurance exchanges.

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