Obamacare is lowering healthcare costs, not increasing them:
Even as coverage efforts are sputtering, success on the cost front is becoming more noticeable. Since 2010, the average rate of health-care cost increases has been less than half the average in the prior 40 years. The first wave of the cost slowdown emerged just after the recession and was attributed to the economic hangover. Three years later, the economy is growing, and costs show no sign of rising. Something deeper is at work.
The Affordable Care Act is a key to the underlying change. Starting in 2010, the ACA lowered the annual increases that Medicare pays to hospitals, home health agencies and private insurance plans. Together, these account for 5 percent of the post-2010 cost slowdown. Medicare payment changes always provoke fears — in this case, that private plans would flee the program and that the quality of care in hospitals would suffer. Neither of these fears has materialized, however. Enrollment in private plans is up since the ACA changes.
The law also emphasized that payments should be based on the value, not the volume, of medical care. In a value-based system, compensation is made for the patient as a whole, not for specific services provided. As a result, eliminating services that are not needed is financially rewarded. The reaction to this change has been rapid: Hospital readmissions, which used to bring in substantial dollars, are now penalized.
Before he was criticized for his statements about insurance continuity, President Obama was lambasted for his forecasts of cost savings. In 2007, Obama asserted that his health-care reform plan would save $2,500 per family relative to the trends at the time. The criticism was harsh; I know because I helped the then-senator make this forecast. Yet events have shown him to be right. Between early 2009 and now, the Office of the Actuaries at the Centers for Medicare & Medicaid Services has lowered its forecast of medical spending in 2016 by 1 percentage point of GDP. In dollar terms, this is $2,500 for a family of four.
Looking ahead, there is every reason to believe that costs will continue to grow slowly, maybe even more slowly. A study in Massachusetts showed that ACO savings increase over time as organizations move into more areas that can slow cost growth. An analysis of exchange premiums estimated that insurance costs in the exchanges are 16 percent below what was forecast two years ago; the lower costs were attributed to competition from new entrants in the market.
If cost growth continues at its low pace, the cumulative savings to the federal government would be more than $750 billion over the next decade. Such savings are likely to dwarf anything that comes out of Congress this year.
Every time Republicans fearmonger about Obamacare, facts prove them wrong. Yes, the website was a problem. But the underlying fundamentals of Obamacare are working. Costs are slowing. And Republican governors have lost their main excuse for not expanding Medicaid.
Yet I just saw the Republican former governor of Virginia Jim Gilmore on my TV repeating about a hundred times that “there are no cost savings in Obamacare” and “costs are going up.” It’s simply not true. Just because you repeat something over and over again does not make it true, Republicans.
This is what I don’t understand about Republicans. This fact-free bubble in which they live and breathe, where they seem to think if they say something enough times it will magically become true? It’s not working for you guys. Facts are facts, wishing they weren’t so doesn’t change them. And none of these facts has anything to do with a crappy website.