“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, chief CMS actuary, said in an interview Wednesday following a news conference on the report.
The overall annual growth in healthcare spending, from all sources, will accelerate from a low of 3.9% in 2010—when spending was muted by the recession—to a high of 8.3% in 2014, according to the CMS actuary's office. Annual increases will drop to 6.2% by 2020. Also, health spending will grow 5.8% annually through 2020, which is 1.1% faster each year than the projected growth in the gross domestic product. The projection also found healthcare spending as a share of GDP will grow in the coming decade from 17.6% in 2009 to 19.8% by 2020, which will increase overall spending from $2.6 trillion in 2010 to $4.6 trillion in 2020.
Those estimates may still severely underestimate future healthcare outlays because they assume that planned Medicare cuts in physician payments will occur as planned at the end of 2011. Foster, whose estimates are required to track provisions of federal law, as written, has acknowledged that Congress is unlikely to allow the CMS to cut Medicare physician payments by 29.5%.
Supporters of the law, however, rejected the numbers as inaccurate because the report did not include any expected savings from a variety of cost-saving initiatives that will launch in the coming years. The administration is still finalizing the rules for the first such initiatives that supporters of the 2010 overhaul hope will exert a significant enough cumulative impact to slow the growth in healthcare costs.
“As for bending the cost curve, I have faith in the delivery system reforms we put into the Affordable Care Act,” Rep. Pete Stark (D-Calif.), a leading congressional advocate of the healthcare law, told Modern Healthcare. “Critics will try to poke holes at every turn, but the reality is we need time for implementation to show us what works and what doesn't.”
It will take years to launch, test and scale initiatives such as Medicare's accountable care organizations, payment bundling and value-based purchasing, according to healthcare experts. But neither the White House or HHS officials offered any estimated timeframes for when such cost-control measures—assuming they deliver their intended savings—will begin slowing or reversing the accelerating rise in healthcare spending.
“(T)hese provisions of the law represent ideas that hospitals, doctors and employers all over America have been putting into practice for years, where they've been able to increase the quality of healthcare and reduce costs,” Nancy-Ann DeParle, White House deputy chief of staff, wrote on the administration's healthcare blog on the day the projections were released. “We are confident that these reforms—in addition to those in the law—will help make our healthcare system more efficient, provide better healthcare to millions of Americans and bring down healthcare costs for all of us.”
Some provider advocates likewise expressed hope that the payment and delivery reforms contained in the law will deliver their promised savings. Others, though, said the findings affirmed their reservations.
The 2010 healthcare law “was basically a coverage bill,” Mary Grealy, president of the Healthcare Leadership Council, a coalition of healthcare chief executives, said in an interview. “We just didn't get to the other half, which would be aimed at the cost-drivers in the system.”
Grealy said the healthcare system will not control ongoing steep increases in spending until additional legislation reshapes the dominant public insurance plans to give patients more options and incentives for patients to choose lower-cost care.
The estimates also provided fodder for the law's critics.
“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 a in written statement to Modern Healthcare.