Obamacare projected to cost hundreds of billions less

Surprise! One think tank says the Affordable Care Act is responsible for about 25 percent of a projected drop in health costs.

By Money Staff Dec 6, 2013 4:01PM

This post comes from Rick Ungar at partner site Forbes.com.

 

Forbes.com on MSN MoneyAmidst the dark skies of the Healthcare.gov launch, some daylight may finally be emerging with respect to one of the critical goals of the Affordable Care Act -- bending the cost curve of America's expensive health care system.

 

Medical doctor © CorbisAccording to a New York Times report earlier this week, the Congressional Budget Office has quietly removed hundreds of billions of dollars from the projected costs of Obamacare, primarily the result of an anticipated decrease in the federal government's contribution to the Medicaid expansion program along with the projected cost of the subsidy payments to those buying private insurance policies on the healthcare exchanges.

 

Why the good news?

 

The more favorable projections are the direct result of the slowing trend in the growth of health care spending over the past five years leading to a slowdown in rising costs. While, 10 years ago, per-capita spending on health care had been growing by an average annual rate of 5 percent, that number was dramatically cut to 1.8 percent during the 2007-2010 period and reduced even further to 1.3 percent in the years following 2010.

 

Do we have Obamacare to thank for this highly successful "bending" of the cost curve?

Naturally, the answer depends upon who you ask as there simply is no definitive way of knowing -- yet.

 

While most economists believe that the lion's share of the reduction is due to the sluggish economy -- making Americans far more careful when it comes to making decisions regarding when or if to spend money on medical care -- others believe that some of the plans built into the ACA designed to get people to spend less may actually be working.

 

Among Obamacare inventions that do appear to be paying off in lower health care costs is the government's refusal to pay hospitals more when patients are re-admitted within 30 days of their initial discharge. Additionally, new plan designs engineered to reward providers for quality of care rather than for quantity of care may well be paying off in terms of lowering the overall cost of care.

 

According to the Kaiser Family Foundation -- widely regarded as an honest, non-partisan broker when it comes to health care issues and analysis -- the declining increases in the cost of health care is 75 percent the result of economic factors and 25 percent a benefit of the cost cutting measures in the ACA that do, in fact, appear to be working.

 

Of course, the big question is whether or not these cost lowering provisions of Obamacare will continue to do the job once the economy regains its more typical trajectory.

 

There are reasons to be hopeful that health care spending can be held down once the economy kicks into higher gear.

 

For starters, while many Americans shopping for new health insurance policies may be decrying the higher deductibles they are discovering in the new offerings, higher deductibles should have a meaningful impact on the decisions people make when determining whether or not a visit to the doctor or agreeing to a given procedure is really necessary. While a $250 deductible will likely not cause a patient to ask how much a suggested CT Scan is going to cost, a $3,000-$5,000 deductible is far more likely to cause the patient to ask a few more questions and make more focused decisions when payment for the test is coming out-of-pocket.

 

Not surprisingly, there are no shortage of economists and pundits who believe that the ACA will prove inadequate to the task of controlling costs once the economy is in better shape.

 

Others are more hopeful, believing that the slowdown in costs are very much a result of hospitals and insurance companies understanding that something had to change given the unsustainable trends in rising costs. As a result of a desire to derail out-of-control costs before the costs derailed them, insurers and hospitals became involved in substantial systemic revisions designed to lower health care spending  even before the government required them to do so.

Discussing whether the current decreases can last when previous periods of cost-curve bending did not, Annie Lowrey writes in  her New York Times piece --

 

This time may be more durable. Insurance and hospital executives in Massachusetts, Illinois and California, among other places where reforms have gone the furthest, report a consensus that spending growth had become unsustainable, and that expectations that Washington would force changes to the system spurred them to make changes themselves.

If this is true -- and I believe the evidence reveals that it is -- these self-imposed changes, in tandem with the changes brought about by elements of Obamacare that don’t receive nearly as much attention as the more hot button issues, may prove to provide lasting changes to the system; changes that will point our cost trajectory in the right direction.

 

Like most elements of the Affordable Care Act, these issues and results only go to prove that far more time is required before we can even begin to measure the real benefits or detriments of Obamacare.

 

While this reality may prove unsatisfying to the media, politicians and those in the public who are so emotionally committed to the failure and ultimate death of Obamacare -- whether for political purposes or only so that the opponents can experience the satisfaction of having been right -- anyone interested in realistic measurement of this dramatic change in our system better settle in for the long run.

 

It's going to be awhile until we know how this story ends.

 

More from Forbes.com:

 

VIDEO ON MSN MONEY

1279Comments
Dec 6, 2013 4:24PM
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Someone should explain to the geniuses at MSNBC the difference between health care costs going down and people spending less because it costs them more, or because they have lousy jobs on account of a bad economy.
Dec 6, 2013 4:36PM
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We can insure 30 million more high risk people...  and slash the average premium by $2500/yr, and you can keep you plans and doctors...

Apply some common sense.   30 million bad risk patients will cost billions more, not less.

And the young and healthy have no desire to PAY THEIR WAY.  They rather not participate.   It seems the socialist Obama forgot that socialism requires the use of force and the bayonet to compel people to work for someone else's benefit.

REPEAL OBAMACARE and fire every democrat on the ballot until it is done....


Dec 6, 2013 4:25PM
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Gee I wonder why they call it "Obama Care" when reporting something they think is positive about it and they call it ACA when reporting something negative...
Dec 6, 2013 4:23PM
Dec 6, 2013 4:24PM
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hmmmm….obama's own MSN has a report from the messiah's admin say costs will be cut

I have my own two words for all of the 

Horse
Manure
Dec 6, 2013 4:21PM
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" the projected costs of Obamacare"

PROJECTED costs.

Only in government does it exist that if you were going to spend $10 billion next year and you now are only going to spend $9 billion next year it is a savings.  
Dec 6, 2013 4:08PM
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MORE OBAMA PROPAGANDA! ****! MY INSURANCE WENT UP FROM 64.00 A MONTH
THRU MY EMPLOYER TO 584.00! AND I'M A SINGLE MALE OVER 30 WITH NO HEALTH ISSUES
NO KIDS NO WIFE! WHY THE F AM I PAYING FOR MATERNITY COVERAGE??? I GUESS OBAMA
KNOWS SOMETHING THE REST OF US DOESN'T KNOW??? I GUESS MEN CAN HAVE KIDS!!!
WHAT A BUNCH OF ****! I HOPE THIS FING AHOLE GETS A SERIOUS HEALTH ISSUE AND
HE HAS TO COME UP WITH A MILLION DOLLARS CO PAY AND THEN DENIED BY DEATH PANEL!

Dec 6, 2013 4:31PM
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MSNBC is obamas personal propaganda organization. The only people that will get a good deal is the same ones who are already sucking the hind teat of the government.
Dec 6, 2013 4:37PM
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it's already cost a billion and it's not even finished...this article is a LIE!!  Impeach Obama NOW!!
Dec 6, 2013 5:05PM
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If there are 40% less general doctors & 60 % less specialists,  who cares... You'll die before you see one!

Who voted for this idiot?

Dec 6, 2013 4:33PM
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Geez, these morons will try ANYTHING to put lipstick on this pig!  What a bunch of lying out the butt jerks. Does anybody think Obama and/or his minions can get any worse or become a bigger liars?
Dec 6, 2013 4:46PM
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My insurance has gone from $525 per month to $1010 per month under the new ACA........and that is with a decent size company here in Colorado. I am not buying this article at all.......I am married with 3 kids and my company pays $500 towards my plan and I pay the difference.
Dec 6, 2013 4:44PM
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The author must be related to MSNBC's  CHRIS MATTHEWS  !!!!!!!!  What a JOKE !!!

Dec 6, 2013 4:25PM
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Projected costs will go down because with the ludicrous deductibles on many of the lower end ACA policies people won't be going to the doctor unless they are in serious pain.
Dec 6, 2013 4:39PM
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Just don't believe it. Hard to believe that Obamacare will save money.  The subsidies(tax payer money) are bound to go up.  Higher taxes are inevitable, because this administration doesn't care about the costs.. They know once it gets a hold on the public it will be very hard to reverse. Thus all the lies
Dec 6, 2013 4:32PM
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Probably won't be to long until the CBO "reverses" this story...as the White House has a tendency to do lately...
Dec 6, 2013 4:27PM
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Um, they save money by not paying hospitals for patients being re-admitted after 30 days, so I guess the patient gets to pay that?  Meaning there insurance sucks.

 

Huge savings on medicaid expansion, yeah because there are going to be many less people covered, not because their is any cost efficiency.  Give me a break.

Dec 6, 2013 4:34PM
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Bull-hit everytime he lies to save face or his idiot supporters lets wait 18 months and see what the truth is. Then lets change election to have a moral code and a non profit clause to those elected so they can't receive or anyone they are associated with ,monies from anyone  at anytime until they have been out of office for ten years
Dec 6, 2013 4:29PM
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Plus of course health care costs go down when all the plans have raised deductibles.  It takes a lot of the risk for the insurer out of it.
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