With health-care reform, the good news is nearly always in the bad news. Each independent analysis of the new law that will eventually extend insurance to nearly everyone is treated as a doomsday report of rising costs to individuals, businesses and the government. But at bottom they tend to show just the opposite.
That is the case with the big report this week of the Medicare actuarial office, which studied the impact of the law through 2019, when it fully phases in, and compared that to what would likely happen if the law had not been enacted and the country continued along its present course.
The bottom line is that the average amount spent by Americans on health care in 2019 will be $13,652, compared with $13,387 that would be spent per person if there were no health-care reform. The difference is $265 per person.
But that is unvarnished good news. The reason that total health spending and the average health spending per person will go up is that tens of millions of people in 2019 will have health insurance who would not otherwise have it. If they are insured through Medicaid or a private health plan acquired through the new state health insurance exchanges, they will go to the doctor and to the hospital more often than if they were not insured. If they did not, there would be no point in extending health coverage to everyone.
Remember that during the big health care debate in 2009 one premise for opposing the legislation, especially in Arkansas, was that if all the poor people and the other uninsured could afford to go to the doctor or the hospital when they got sick it would mean that doctors and hospitals would no longer have the time and space to treat you because there are already not enough primary-care doctors. And Arkansas has a greater proportion of poor people and adult uninsured than just about any state.
No one — not the Medicare economists, the Congressional Budget Office or independent nonprofit foundations like Kaiser that study these things — can project reliably what will happen over the next nine years. Too much depends upon human behavior.
It is only a learned guess how many of the millions of uninsured who are above 400 percent of the family poverty line will buy insurance in the years after the mandate tolls in 2014 and how many will simply pay the tax penalty and wait until they get sick to get insurance.
The Medicare actuary predicted that 6 million more people will buy insurance than the Congressional Budget Office predicted back in the winter when Congress was passing the legislation. That largely accounts for the slightly higher per-person spending on health care in 2019.
If you are already insured, either through employer group plans or the very expensive individual policies, you can look at the actuarial projections in a different way. It means that you, or you and your employer combined, will almost certainly be paying less for your insurance in 2019 and beyond than you would if the law had not passed or if it is repealed. The steadily increasing medical costs of the uninsured who do get treated at hospitals would continue to be shifted to you without the new law. That is why Arkansas’s hospitals were the biggest supporters of the law. If the law succeeds in insuring just about everyone it will nearly end the hospitals’ vast unreimbursed care, and that means those costs will cease to be passed along to the insured.
One conclusion from all the studies is that the health law in this decade will not drive down total health-care spending or the individual cost of treatment and drugs. It will begin to do that but very modestly in its second decade unless Congress comes back and weakens the law.
But we all know why there are no draconian cost savings in the law. The only way that the government can force cost savings is through government insurance. That could not pass, so Obamacare, as it is called, simply builds upon the employment-based private insurance system. The government can wring economies from the government insurance programs, principally Medicare and Medicaid, which are the programs that insure the sickest people, but the steps that would regulate private insurance spending are hard to pass. The new health law will cap the overhead and profits of insurance companies, but if there is a Republican Congress and president in two years that is the one feature of the law that is sure to go. The insurance industry hates it.
The law will make some significant savings the next 10 years in government costs, mainly by reducing the huge taxpayer subsidy to insurance companies that sell Medicare Advantage plans to the elderly and disabled. But those savings will not reverse the ceaseless rise in medical costs.
The Medicare actuary’s analysis ought to be particularly good news for Arkansas if it broke costs down by states. It almost certainly would show an increase in total health-care spending greater than the nation as a whole because a larger part of Arkansas’s adult population is not insured and will become insured with large federal support in 2014 and beyond. Greater health-care spending in one of the unhealthiest populations in the country is unalloyed good news — particularly if we’re not going to pay for it, or at least very few of us.
