CMS Report: Obamacare - Gov't Health Spending Grows; Families - Premium Hikes: Businesses - Rising Costs

When President Obama was pitching his health care law to Congress and the American people, he claimed in a speech that his plan “will slow the growth of health care costs for our families, our businesses, and our government.” Predictably, the reality has been just the opposite, with costs rising for families, businesses and the government.

A new report from the Office of the Chief Actuary for the Centers for Medicare and Medicaid Services (CMS) finds “The combined effects of the Affordable Care Act's coverage expansions, faster economic growth, and population aging are expected to fuel health spending growth this year and thereafter (5.6 percent in 2014 and 6.0 percent per year for 2015–23).”

Reacting to the same report, the Washington Examiner’s Philip Klein pointed out yesterday, “When Obama was selling his healthcare legislation, he argued in a June 2009 speech to the American Medical Association that his brand of reform was needed because ‘the status quo was unsustainable.’ He warned, ‘If we fail to act, one out of every five dollars we earn will be spent on healthcare within a decade.’ . . . As the economy improves, Obamacare continues to expand, and the Medicare age population explodes, health spending is expected to rise by an average of 6 percent a year over the 2015 to 2023 time period. . . . Because of this, health spending as a share of gross domestic product is expected to increase from 17.2 percent in 2012 to 19.3 percent in 2023 – representing nearly one in five dollars of the economy.”

The report further states, “By 2023 federal, state, and local government financing is projected to account for 48 percent of national health expenditures, up from 44 percent in 2012, and to reach a total of $2.5 trillion.” And a Congressional Budget Office (CBO) estimate from last month predicted that “[f]ederal spending for the major health care programs will jump by $67 billion (or about 9 percent) in 2014 . . . .”

Meanwhile, as ARRA News Service reported yesterday all summer there have been reports of insurance companies announcing premium increases for next year, some as much as 30%. As The New York Times noted yesterday in a story about the problems likely to face Obamacare enrollment this fall, “One challenge facing consumers will be wide swings in prices. Some insurers are seeking double-digit price increases . . . . Adding to the complexity is the shorter time frame for choosing a new policy: three months instead of six.” Obviously, then costs for families are increasing.

Last month, CNBC reported, “Many businesses said Obamacare is jacking up their employee health coverage costs, and they expect it to do so even more next year, two new surveys of businesses by the Federal Reserve Bank of New York have found. As a result, consumers in the areas covered by the bank could be paying more next year—and some workers at the firms might need to look for a new job, the surveys found.

The median respondent to the N.Y. Fed surveys expects health coverage costs to jump by 10 percent next year, after seeing a similar percentage increase last year. Not all firms surveyed said the Affordable Care Act (ACA) is to blame for those cost increases to date. But a majority did, and the percentage of businesses that predicted the ACA will hike such costs next year is even higher than those that said it did this year. More than a quarter of the manufacturing and service firms surveyed said they either have or will boost prices for goods and services ‘because of the effects that the ACA is having on your business,’ according to the bank's surveys.

About 20 percent of respondents to both surveys said they were reducing their number of workers and/or raising the share of part-time workers as a result of the ACA. ‘A similar proportion said they were paying less compensation per worker because of the ACA, and a similar proportion said they were outsourcing more work,’ according to the bank's report.” So costs are increasing for businesses, too, and those cost increases are negatively affecting employees and consumers, too.

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