Health Care Reform Will Raise Costs


Health care reform will raise health costs, but the increase will be a modest one, reveals a government-sanctioned analysis updated on Thursday.

According to the Office of the Actuary in the Center for Medicare & Medicaid Services, the average annual growth in health care spending will be just two-tenths of one percentage point higher through 2019 under President Obama’s health care reform.  

Additionally, more than 32 million uninsured individuals will receive coverage under the new law.   

"The impact is moderate," Andrea Sisko, an economist with the Office of the Actuary, said in the report.

The non-partisan Office of the Actuary annually produces projections of health care spending for categories within the National Health Expenditure Accounts, which track health spending by source of funds (private, Medicare, Medicaid) and type of service (hospital, physician, prescription drugs, etc.). Their latest projections, which span from January 2009 to December 2019, were updated to account for the passage of the new health care bill.

In August, another analysis conducted by the Health and Human Services Department reached a similar conclusion, estimating that costs would increase by about 1% over 10 years while providing 34 million insured Americans with coverage.

The latest analysis found that in light of the new law, Americans will spend an average of $13,652 per person a year on health care in 2019. Without the law, that cost would be $13,387. That works out to $265 more with the overhaul. However, Americans currently spend $8,389 a year per person on health care, including the cost of insurance premiums, copays for doctors visits, prescription drugs and medical procedures.

The increase means that by 2019, health care costs will account for nearly 20% of the economy’s spending. Today, health care spending accounts for about 17%.

According to the Associated Press, these findings can be used as ammunition by both political parties. Republicans will likely argue that high health care costs should have been cut further, not increased under the new legislation. Democrats, conversely, might argue that expanding coverage to so many Americans was worth the moderate rise in price and that costs will come down eventually.

The projections show that expenditures will start to taper off in 2018 after major proponents of the health care bill go into effect in 2014.

For more about the the Patient Protection and Affordable Care Act of 2010, check out MainStreet’s health care coverage here.

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