National Health Spending to Increase Under Senate Health Reform Plan, Says CMS Actuary
The CMS Office of the Actuary (OACT) has issued its analysis of the Senate Democratic leadership’s health reform plan, the Patient Protection and Affordable Care Act (H.R. 3590), as introduced on November 18. OACT estimates that the Senate proposal would increase total national health expenditures by $234 billion (0.7 percent) during calendar year 2010-2019. The increase is attributable primarily to (i) greater utilization of health care service by individuals becoming newly covered or having complete coverage; (ii) lower prices paid to health providers for the subset of those individuals who become covered by Medicaid; and (iii) lower payments and payment updates for Medicare services, together with net Medicaid savings from provisions other than the coverage expansion. The report also discusses the potential impact of the proposed $493 billion in Medicare cuts over 10 years. In particular, the report charges that the savings associated with annual productivity adjustments for most providers are probably "unrealistic" since it is doubtful most providers could reduce costs to the extent envisioned in the legislation. OACT simulations project that as many as 20 percent of Part A providers could become unprofitable within 10 years, potentially jeopardizing Medicare beneficiary access to care.
