Experts: Medicare, not Obamacare is Slowing Healthcare Spending

Thursday, 13 Mar 2014 10:11 AM

By Sandy Fitzgerald

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Medicare and several other factors, and not Obamacare, are actually what is slowing down the nation's spending on heatlhcare, say two experts who maintain President Barack Obama's chief economic Jason Furman "went over the deep end" with the administration's claims.

In an article written for Forbes, Dana Goldman, director of the USC Schaeffer Center for Health Policy and Economics and Sarah Axeen, a Ph.D. candidate for the USC School of Policy, Planning and Development, say according to their analysis, most of the slowdown is a "Medicare phenomenon."

Medicare spending per beneficiary rose by 8 percent annually from 1980 to 2005, Goldman and Axeen write, but between 2007 and 2012, the rate fell to 3 percent.

According to the Congressional Budget Office, there was also a 3.2 percentage point reduction in beneficiary spending growth, wich started in 2006.

"The thorny problem for the Administration, however, is that the ACA was passed in 2010 — after the slowdown had already started," the Forbes piece says.

Further confusing the matter, the administration is correct in some claims that Obamacare has reduced the deficit somewhat, because the CBO has made multiple downward revisions in projected Medicare and Medicaid spending because of changes in provider behavior and demands for care.

"Conveniently though, they seem to forget that much of this deficit reduction is due to revenue measures — i.e., tax increases — that are estimated to raise about $16 billion in 2014," say Goldman and Axeen.

But there were many factors beyond Obamacare that led to the 3.2 percentage point slowdown in Medicare spending between 2000 and 2010, according to the CBO analysis, including slightly lower average provider payments and improvements in beneficiary health.

The Forbes piece goes on to ask if the Affordable Care Act should have been limited to Medicare, but points out that there is more to Obamacare than slowing government spending.

But as 7 million more people get insured through the exchanges and 9 million sign on for Medicaid, healthcare spending will grow faster, said Goldman and Axeen, who note CBO projections show direct government spending of $23 billion for subsidies and other factors.

"The slowdown in spending trumpeted by the Administration, while important, will be short-lived," they predict. "The lower Medicare spending growth and hopes of spillovers to the private sector cannot offset the growth in spending that will result from these newly insured individuals."

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