Since the ACA's passage, CMS's health care spending estimates have dropped by $2.6 trillion, analysis finds

Spending projection fell from $23.7T in 2010 to $21.1T in 2015

CMS projects that U.S. health spending from 2014 to 2019 will be $2.6 trillion lower than the agency predicted shortly after the Affordable Care Act (ACA) was signed into law in 2010, according to a report released Monday.

For the report, Urban Institute researchers compared projections CMS made in 2010 and 2015 for U.S. health spending from 2014 through 2019. The Robert Wood Johnson Foundation funded the report.

Key findings

According to the report, CMS in 2015 projected the United States from 2014 to 2019 would spend $21.1 trillion on health care. That estimate is $2.6 trillion less than CMS's September 2010 ACA baseline forecast, which estimated that the country would spend $23.7 trillion on health care from 2014 to 2019.

According to the researchers, CMS in 2015 projected that spending on Medicaid would be $1.05 trillion less than the agency had estimated in 2010. The researchers said the lower spending could be the result of a 2012 Supreme Court ruling that made Medicaid expansion optional for states.

Further, CMS in 2015 predicted that spending on Medicare would be $455 billion less than it had projected in 2010, according to the report. The researchers said lower Medicare spending could be the result of:

  • Budget sequestration, which called for Medicare payment cuts; and
  • Slower-than-anticipated spending growth from 2010 to 2014.

In addition, CMS in 2015 estimated that spending on private health coverage would be $664 billion less than the agency had projected in 2010. The researchers said factors behind that possible spending drop could include:

  • Lower growth in prescription drug spending than expected;
  • A shift toward higher deductibles and cost-sharing in private plans; and
  • Slow economic recovery.

The researchers also cited evidence that health care spending growth has slowed after spiking in 2014.

Researchers say ACA could be driving lower spending

The researchers also noted the possibility that reforms implemented under the ACA have contributed to the reduced health care spending but said that link has not yet been demonstrated. According to the report, examples of such reforms include financial penalties for hospitals with high readmission rates and accountable care organizations

The researchers said if the ACA is behind slower health care spending growth, "then slower growth (in national health spending) may persist beyond current projections."

However, the researchers said if lower health spending is driven mainly by a slow economic recovery, "a return to faster growth with a robust recovery" likely would occur (McIntire, Morning Consult, 6/20; Sullivan, The Hill, 6/20; Mangan, CNBC, 6/20).

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