What Health Spending Would Look Like in 2014 Under Obamacare

Jeffrey H. Anderson
The Weekly Standard
[via Benjamin Rush Society]

new report from federal officials at the Centers for Medicare and Medicaid Services (CMS) says that Obamacare will increase nationwide health care spending. Particularly interesting are the report’s findings for 2014, the year that’s slated for Obamacare’s grand opening (if the overhaul isn’t repealed first). The report predicts that the growth in health care spending in Obamacare’s real first year (2014) would be 8.3 percent, which is more than double the growth in health care spending (3.9 percent) in the year that Obamacare was passed into law (2010). Again, this is the verdict of government officials working within the Obama administration.

The report breaks down what it predicts will be “a significant acceleration in the national health spending growth rate in 2014 (8.3 percent, compared to 5.5 percent in 2013)”:

“For the three largest [health] sectors (hospital services, physician and clinical services, and prescription drugs), total spending is projected to be higher when the major expansions of this law are implemented in 2014….

“In 2014, overall hospital spending growth is projected to accelerate to 7.2 percent [compared to 5.3 percent in 2013], which is 1.0 percentage point and $8.6 billion higher than projected in the absence of health reform….

“By 2014, spending growth for physician and clinical services is projected to accelerate 3.3 percentage points to 8.9 percent, which is 3.1 percentage points and $17.8 billion higher than projected in the absence of reform….

“In 2014, growth in prescription drug spending is expected to increase sharply to 10.7 percent [from 5.7 percent in 2013], which is 5.1 percentage points and $15.8 billion higher than projected in the absence of the Affordable Care Act [Obamacare]….

“In 2014, Medicaid spending is projected to increase substantially (20.3 percent) [from 6.8 percent in 2013] as a result of the expansion in Medicaid eligibility under the Affordable Care Act. Enrollment (75.6 million) is projected to be about one-third higher than in 2013 as eligibility is extended to all persons under age sixty-five in families with incomes at or below 138 percent of the federal poverty level….

“In 2014, growth in private health insurance premiums is expected to accelerate to 9.4 percent, 4.4 percentage points higher than in the absence of health reform, as an estimated 13.9 million people obtain coverage through exchange plans.”

Meanwhile, “some employers of low-wage workers will stop offering health coverage (and many of their employees will move to the exchange plans, while others move into Medicaid or become uninsured).”

The report concludes, “Combined with the entry of the baby boomers into Medicare and Medicaid, the impact of the Affordable Care Act—stemming from the expansion of Medicaid, subsidies associated with exchanges, and administrative costs associated with implementing and operating the various provisions—is projected to increase federal, state, and local governments’ estimated share of total health spending to near 50 percent in 2020. At the same time, households and private businesses are anticipated to pay for a smaller portion of the nation’s health bill than they would have without the Affordable Care Act, but still will face a growing burden on their respective limited resources.”

Is it any wonder that Americans overwhelmingly support repeal?

Related: Health Care Coverage and Form W-2(Obamacare)

Late last month, the IRS issued guidance on how employers will report the aggregate cost of employer-sponsored health coverage provided to an employee on Form W-2. The Patient Protection and Affordable Care Act (PPACA) imposed the reporting requirement, originally effective for the 2011 Form W-2s (for issuance in 2012). However, an earlier IRS Notice postponed this reporting requirement until the 2012 Form W-2s (for issuance in 2013).

Calculation of Aggregate Cost. The aggregate cost of coverage provided to the employee includes amounts that both the employer and the employee pay. In addition, the aggregate cost includes any portion of the cost of coverage that is includable in the employee’s gross income (for example, the cost of coverage provided to over-age 26 dependents). The reporting requirement applies to only “applicable employer sponsored coverage,” defined as coverage under any group health plan that is excludable from the employee’s gross income under Internal Revenue Code Section 106, or that would be so excludable if it were employer-provided coverage that same section.

Related links from this post: Cadillac Health Plan Tax to Penalize Majority of Employers by 2018 and Reporting Value of Insurance Plans on Employee Forms W-2 

Read also, The Wonders of Socialized Medicine

As America heads down the path of government control over medical spending and treatment, it is worth looking across “the Pond” at Great Britain. How’s socialized medicine working out over there after several decades?…

Update: HHS Mandates Birth Control With No Co-pays

Comments are closed.