Health Law Cost Study Fuels Competing Claims

By: - August 1, 2011 12:00 am

New projections show that health care spending will grow faster than the nation’s GDP over the next decade. But the increase will be only slightly more than would be the case without the new national health law.

At least that’s what the White House and other health law supporters drew from a new analysis of actuarial data released by the U.S. Centers for Medicare and Medicaid Services. The analysis , published in Health Affairs last week, reported that health spending through 2020 would rise only one-tenth of one percent more under the health law than it would have otherwise — despite some 30 million more people getting health coverage.

“The bottom line from the report is clear: more Americans will get coverage and save money and health expenditure growth will remain virtually the same,” wrote the administration’s Deputy Chief of Staff Nancy Ann DeParle on the White House blog.

But health law critics read the report a different way. 


Here’s what health policy expert Kathryn Nix of The Heritage Foundation, a conservative research group, had to say: “Runaway spending has overtaken the United States health care system and is on the rise. More notably, the study confirms Obamacare does not ‘bend the cost curve’ but only increases government’s share of spending in the health care system instead.”


Growth in health care spending hit a historic low in 2010, rising less than 4 percent over 2009 levels, according to the study. That’s mainly because roughly 5 million people lost employer-provided health care and many more limited out-of-pocket expenditures. Even so, the numbers were big. The nation’s health care bill came to $2.7 trillion, nearly 18 percent of the GDP. The federal government’s share of that was 27 percent. Even though fewer people went to the doctor, health care spending still outpaced economic growth in 2010 by more than 1 percent. 


Over the next 10 years, federal actuaries expect the pace to pick up. By 2020, the national bill will be $4.6 trillion — one in every five dollars spent in the U.S. economy. The government’s share also will rise. Washington will pay 30 percent of the tab, and state and local governments will pay almost 20 percent. Average annual spending growth over the decade will be 5.8 percent, according to the analysis. 


A major turning point will come in 2014, when the health law is slated to take effect. An estimated 23 million previously uninsured people are expected to sign up for health insurance, pushing spending growth to more than 8 percent. The study notes, however, that because most of the newly insured will be younger and healthier than the rest of the population, they’re mostly expected to visit doctors and purchase prescription drugs rather than use more expensive hospital services. 


Still, as the population ages over the next decade and medical innovations continue at their current pace, not only will total spending grow, but the average individual health care bill will go up. Last year the annual cost per capita was $8,650. In 2020, the study says, it will be ,710. 

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Christine Vestal

Christine Vestal covers mental health and drug addiction for Stateline. Previously, she covered health care for McGraw-Hill and the Financial Times.