Good News

Although the health reform law - Affordable Care Act (ACA) - will add $478 billion to U.S. health care spending over the next 10 years, the law has little effect the annual growth rate, according to a report by CMS’ Office of the Actuary published in the journal Health Affairs. Without the ACA, health spending would increase by 5.6% annually, compared with 5.7% with the law in place. These new estimates undermine claims by some critics that the law will dramatically drive up healthcare spending.

The report also notes that the ACA is expected to reduce the number of uninsured U.S. residents by 30 million and that the law will decrease spending between 2015 and 2021 by about 0.1% annually because of Medicare cuts and a new tax on high-cost insurance plans.

Bad News

But the new estimates also show how little the ACA will do to fundamentally change the trajectory of healthcare spending. The report suggests that consumers, employers and government will continue to face higher and higher medical bills as rising costs outpace economic growth.

Other provisions of the law that are credited with slowing spending include a new tax on high-cost “Cadillac” insurance plans, scheduled to go into effect in 2018, and new regulations limiting administrative spending (MLR) by health insurers.

The authors of the report said they were unable to assess the potential effects of provisions of the ACA designed to make doctors and hospitals deliver care more efficiently by working together.