- The Washington Times - Thursday, July 28, 2011

Despite President Obama’s promises to rein in health care costs as part of his reform bill, health spending nationwide is expected to rise more than if the sweeping legislation had never become law.

Total spending is projected to grow annually by 5.8 percent under Mr. Obama’s Affordable Care Act, according to a 10-year forecast by the Centers for Medicare and Medicaid Services released Thursday. Without the ACA, spending would grow at a slightly slower rate of 5.7 percent annually.

CMS officials attributed the growth to an expansion of the insured population. Under the plan, an estimated 23 million Americans are expected to obtain insurance in 2014, largely through state-based exchanges and expanded Medicaid eligibility.

The federal government is projected to spend 20 percent more on Medicaid, while spending on private health insurance is expected to rise by 9.4 percent.

The projections came as the legal challenges to the health care bill finally reached the U.S. Supreme Court. In a filing Wednesday, the Thomas More Law Center asked the justices to strike down the law, appealing a lower-court ruling that Congress has the authority to require Americans to buy health insurance.

But the projections also gave Republicans - who uniformly opposed the legislation - an opportunity to remind Mr. Obama of the emphasis he put on cutting back health care costs. While trying to sell his health care plan in 2009, Mr. Obama frequently stressed “bending the cost curve.”

“Simply put, this report states the obvious, that Americans have known for more than a year - the $2.6 trillion law only makes the fundamental problem of skyrocketing health care costs worse,” said Sen. Orrin G. Hatch, Utah Republican and ranking member of the Senate Finance Committee.

In a blog post responding to the report, White House Deputy Chief of Staff Nancy-Ann DeParle said the recent growth rates to which the study is unfavorably comparing the ACA’s costs have been historically low. National health spending grew by 3.9 percent last year, she said, while growth is typically closer to 6 percent.

The bottom line is that more Americans will get coverage and save money, and health expenditure growth will remain virtually the same, Mrs. DeParle said.

“The Affordable Care Act creates changes to the health care system that typically don’t show up on an accounting table,” she said. “We know these new provisions will save money for the health care system, even if today’s report doesn’t credit these strategies with reducing costs.”

Health care costs have been rising faster than inflation for years, threatening to eat up an ever-greater share of the federal budget and private-sector spending. Expenditures in the U.S. reached $2.6 trillion in 2010 - more than three times the $714 billion spent in 1990 - and made up 17.6 percent of the gross domestic product.

As health care spending accelerates over the next few years, the portion paid by the government will grow as well. While federal, state and local governments’ estimated share of total health spending was 45 percent in 2010, it is expected to near 50 percent by 2020.

And because those newly insured will be younger and healthier on average, they are expected to visit doctors and use prescription drugs more than visiting hospitals - resulting in slower growth of spending on hospitals than on physician services and prescription drugs.

But even as the ACA will shift around some spending within the health care system, it doesn’t fundamentally fix the skyrocketing cost of health care, said Bob Bixby, executive director of the Concord Coalition, a nonprofit focused on eliminating federal budget deficits.

“We went into the health care debate last year with the idea we had to slow the growth of health care costs, and so this report indicates that we haven’t done that - that we still have a long way to go,” Mr. Bixby said.

• Paige Winfield Cunningham can be reached at pcunningham@washingtontimes.com.

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