October 30, 2014

New Study on Health Care Legislation Raises Uncertainties on Cost Estimates, Indicates Wider Coverage

  • The American health care system is a patchwork of public and private programs that serve citizens in different ways, depending on their age, military...

New health care legislation will increase national health spending by an estimated $311 billion over the next decade, according to a report by Richard Foster, chief actuary of the federal agency that administers Medicare and Medicaid. He cautioned, however, that estimates of the financial impact of the legislation are “very uncertain” because “the scope and magnitude of these changes are such that few precedents exist for us in estimation.”

He estimated that 34 million more people would gain health insurance coverage, up from the 32 million estimate that was widely cited during congressional debate.

Although some provisions in the legislation would help to reduce the growth of health care costs, Foster wrote, “their impact would be more than offset though 2019 by the higher health expenditures resulting from the coverage expansions.” Over the long term, Foster said, the legislation has the potential to slow the rate of health care cost growth, provided that it is fully implemented and maintained.

Foster noted a number of risks that The Concord Coalition has also identified. These include the difficulty of maintaining provider payment reductions over time, restraints on the Independent Payment Advisory Board, and structural flaws in the new disability and long-term care program (CLASS) that may render it unsustainable due to adverse selection.