Health Spending Post-Obamacare Seen @2.5 Trillion Lower

The lingering effects of the recession, slow income growth and possibly Obamacare are all contributing to a sharp drop in estimates of how much will be spent on health care through the rest of this decade.

A report issued Wednesday says that the most recent official projections indicate that the U.S. will spend $2.5 trillion less on health care from 2014 until 2019 than had been originally estimated at the time the Affordable Care Act became law in 2010.

That represents a nearly 11 percent decrease in projected spending, according to the report issued by the Urban Institute, with support from the Robert Wood Johnson Foundation.

The report, which relied on projected spending data from the federal Centers for Medicare and Medicaid Services, says that actual health expenditures during the five-year time frame now are expected to be $21 trillion. Nearly half of the decrease in projections comes from lower spending estimates for Medicare and Medicaid, the government health coverage programs for the elderly and poor, respectively.

The ACA, also known as Obamacare, began taking full effect in 2014, and is scheduled to be almost fully implemented in 2018, when the so-called Cadillac tax on pricy group health plans kicks in.

Much of the reductions in projected spending are “due to the recent recession, and a long period of slow income growth; the growth of high deductible private health plans, cost constraints within state Medicaid programs and Medicare policies related to the ACA,” the report said. The study noted that national health spending since 2009 “has grown at historically low rates,” which played a large part in the lowering of projected spending.

“But it is also likely that the law contributed” to the lower projections, “though how much is impossible to estimate,” the report said.

“While the exact impact of the ACA cannot be determined, it is clear that the nation has successfully expanded [health] coverage, and is now expected to spend considerably less than anticipated even before the law was enacted.”

Kathy Hempstead, who directs coverage issues for the RWJ Foundation, said, “The impact of health reform on this slowdown, and whether it can be maintained, are very important issues.”

The foundation said the new projections may “still be high” given the fact that premiums for health insurance plans offered through government-run Obamacare marketplaces are “much lower than experts originally thought they would be.”

Read the full report here: “The Widespread Slowdown in Health Spending Growth”

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