US Health Care Expense Could Be $2.6 Trillion Below Forecast

Rapidly rising health care expenses have been cited as a primary cause of living cost pressure on Americans. A new study shows there may be some relief. Health care costs could be $2.6 trillion less from 2014 to 2019, well below earlier forecasts.

A report from the Robert Wood Johnson Foundation, “The Widespread Slowdown in Health Spending Growth: Implications for Future Spending Projections and the Cost of the Affordable Care Act,” published by the Urban Institute, claims:

The United States is on track to spend $2.6 trillion less on health care between 2014 and 2019, compared to initial projections made right after the 2010 passage of the Affordable Care Act (ACA).

For ACA, read Obamacare.

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To support the forecast:

ACA Implemention-Monitoring and Tracking This brief updates an April 2015 report in which we analyzed the widespread slowdown in health spending growth leading up to 2014 and the implications for national health expenditure projections and the cost of the Affordable Care Act (ACA). In that report, we compared health expenditure projections produced by the Centers for Medicare and Medicaid Services (CMS) from 2010, just after the ACA passed, to the CMS forecast in late 2014. We found that from 2010 to 2014, cumulative projected spending for the years 2014 to 2019 had fallen by approximately $2.5 trillion.

In this report, we update our previous analysis by comparing the most recent CMS forecast, released in July 2015, to the 2010 ACA baseline forecast. The 2015 forecast incorporates the Medicare Access and CHIP Reauthorization Act (MACRA), which permanently eliminated the sustainable growth rate system for setting physician payment rates in Medicare; our earlier work used CMS forecasts that assumed adherence to the sustainable growth rate system. Here, to be consistent with the most recent forecast, we use an adjusted ACA baseline forecast that assumes a rate freeze for physician payments rather than the cuts projected under the sustainable growth rate system.

The original 2010 adjusted ACA baseline forecast was for total expense of $23.7 trillion. The new forecast is for $21.1 trillion. Thus the $2.6 trillion difference.

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