A new report shows that the most recent national health spending projections are $2.5 trillion lower for 2014-2019, compared to those made immediately following the passage of the Affordable Care Act (ACA). The report, prepared by researchers at the Urban Institute with funding from the Robert Wood Johnson Foundation, points to several factors that contribute to the reduced projections. Among them are slow income growth, more people covered by health plans with high deductibles and narrow networks, and state efforts to contain Medicaid costs. But the report authors propose that the lower projections may also be due to unmeasured effects of the ACA.
Using data from the Centers for Medicare & Medicaid Services (CMS), the report examined spending projections for all payers which adds to similar findings on federal spending from the Congressional Budget Office. For 2014-2019, CMS lowered the forecast of Medicaid spending by $927 billion and private health insurance spending by $688 billion. Medicare spending is also projected to be $384 billion less for 2014-2019.
While the Supreme Court’s decision allowing states to opt out of the ACA Medicaid expansion contributed to the decline in projected spending, the authors note that the primary factor in the reduced projections is the historically low growth in health spending since the recession.
The authors also suggest how the ACA may have contributed to the recent spending slowdown. Lower Medicare payment rates under the ACA, for example, have reduced utilization rates by Medicare patients and may have given private insurers leverage to lower private payment rates as well.
"The most recent CMS projection for national health expenditures in 2014-2019 reflects the recent slower growth in health spending," said Kathy Hempstead, who directs coverage issues at the Robert Wood Johnson Foundation. "The impact of health reform on this slowdown, and whether it can be maintained are very important questions."
If you would like to speak with an expert about the report, please contact Frank Walsh at [email protected] or 504-309-5164.
###
For more than 40 years the Robert Wood Johnson Foundation has worked to improve health and health care. We are striving to build a national Culture of Health that will enable all to live longer, healthier lives now and for generations to come. For more information, visit www.rwjf.org. Follow the Foundation on Twitter at www.rwjf.org/twitter or on Facebook atwww.rwjf.org/facebook.
