Healthcare reform will do little to stop rising costs

by webadmin on June 21, 2012

A new government report has found that healthcare reform will do little to assuage rising healthcare costs in the United States.

According to a June 13 article by Noam N. Levey in the Los Angeles Times, independent economists at the federal Centers for Medicare and Medicaid Services are estimating that by 2021, healthcare spending in the United States will total $4.8 trillion or nearly 20 percent of the nation’s economy.

In 2012, spending for healthcare is expected to total $2.8 trillion.

Contrary to what President Obama’s critics have frequently charged, this rise in costs will have little to do with healthcare reform, which will only cause the total spending on healthcare to be one percent or roughly $478 billion higher than it would be without the law, and that’s with 30 million additional people joining the insurance rolls.

Even though this fact will not prove his critics right, other elements of the report indicate that Obama’s pledge to lower healthcare costs will not come to fruition. In fact, costs will only get higher, the economists conclude, surpassing economic growth and seeing premiums increase 6.8 percent annually for households between 2014, when reform will kick in, and 2021.

Another worrisome finding in the report is sure to add woes within an industry already faced with reimbursement cuts. As numerous additional Americans, both baby boomers and lower-income individuals, join government health-insurance programs in the coming years, Medicaid and Medicare will become an even greater drain on both federal and state resources, with Medicare spending from 2014 to 2019 growing by 6.9 percent annually and federal Medicaid spending by 7.3 percent annually.

There is some success here for Obama, though, since Medicare spending might have been even higher without reform and the 2011 budget deal. Also, the article notes two elements of reform that will slow spending–the new tax on high-cost insurance plans and increased regulations on administrative spending by health insurers.

But the effects of the new law in other areas are impossible to predict right now, the economists say, taking the “wait-and-see” attitude that many healthcare institutions have already adopted.

-by Pete Fernbaugh

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