No Grounds for Claim That Affordable Care Act Lowers Health Care Costs

EXPERT COMMENTARY

No Grounds for Claim That Affordable Care Act Lowers Health Care Costs

By Charles Blahous |
Nov 25, 2013

Public support for the Affordable Care Act (ACA) has plummeted now that the oft-repeated claim that “If you like your health care plan, you can keep it” is widely understood to be untrue. Despite previous assurances, millions of Americans are now grappling with ACA-triggered cancellations of their health insurance policies. Faced with public anger, ACA supporters are now turning to another argument to promote the law: that the ACA is already working to hold down health care cost growth. Unfortunately, some of these claims are just as groundless as the ones that misled so many Americans to believe they would be able to keep their previous coverage.

One particularly egregious example is White House advisor David Cutler’s op-ed published November 8 in the Washington Post, entitled, “The health care law’s success story: slowing down medical costs.” This piece contains the following paragraph:

“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.”

To see why this is wrong, it is useful to break down this paragraph’s thesis into its component parts. Specifically, it claims that:

  • The President’s previous assertions that his “health-care reform plan” would “save $2,500 per family” have been “shown” “to be right,” and that;
  • This is proved by the fact that the CMS actuaries have lowered, between early 2009 and now, their forecast of medical spending in 2016 by $2,500 per family.

For this paragraph to be correct, the ACA must be the reason the CMS actuaries have lowered their 2016 health spending projections. That is flatly untrue.  

To clear this up, let us take a look at those CMS projections for health spending and examine how and why they have changed since early 2009. Here are CMS’s February, 2009 projections for national health spending, as a percentage of GDP, through 2016.

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