Health Reform Law Will Not Help Contain Costs

The new U.S. health reform law won't help contain health costs, as the U.S. president so often claimed while lobbying for passage of his reform package. Instead, it will exacerbate them. Indeed, researchers estimate that health care spending will grow an average of 5.8 per cent per year through 2020, says Sally C. Pipes, president, CEO and Taube Fellow in health care studies at the Pacific Research Institute.

  • Medicare's actuaries found that total health care costs in the U.S. will hit $4.6 trillion by the end of the decade – equivalent to about one-fifth of the entire U.S. economy.
  • That's about $14,000 in annual spending for every man, woman and child.
  • In 2014, when the law's major coverage provisions kick in, total health care costs will jump 8.3 per cent – a rate well above the 5.5 per cent expected for 2013.
  • The president's law is "anticipated to contribute to a significant acceleration in the national health spending growth rate in 2014," according to the actuaries.
  • Worse still, spending on private insurance plans is expected to expand 9.4 per cent that year.
  • That rate is over 4 percentage points higher than the actuaries would have expected without the reform law.

    The biggest costs from the health law come in the form of expansions in public insurance programs. The law increases Medicaid spending by over 20 per cent in 2014 and will bring the program's total enrolment to 75.6 million people. Over the next eight years, the law increases Medicaid expenditures by a whopping $700 billion, says Pipes.

    Source: Sally C. Pipes, Counting Up ObamaCare's Health Cost Inflation, Forbes, August 8, 2011.

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    First published by the National Center for Policy Analysis, United States

    FMF Policy Bulletin/ 24 August 2011
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