HealthCare.gov cost $840 million to build as of March, but the website still isn’t scheduled to be finished until December, according to congressional testimony.The Government Accountability Office will release a report Thursday detailing the Obama administration’s failure to manage HealthCare.gov, drastically increasing the price of the Obamacare website and leading to its breakdown last fall. RELATED: Report: Obama Admin Failures Caused HealthCare.gov Tech FlopGAO’s William T. Woods, director of acquisition and sourcing management, will testify to the House Energy and Commerce Thursday that the federal government had obligated a staggering $840 million by last March on building HealthCare.gov. The website is still not complete.
Medicare spending growth will be slow again in 2014 relative to historical standards, and some of the usual suspects are now crediting the Affordable Care Act — Obamacare — for the good news. For instance, a recent post at Vox suggests that the slowdown in Medicare spending can be attributed, in part, to the ACA’s provision penalizing hospitals for excessive readmissions of previously treated patients.
At the time of the ACA’s enactment in March 2010, the Congressional Budget Office estimated that the readmission provision would reduce Medicare spending by $0.3 billion in 2014, and only $7.1 billion over a decade. That’s about one tenth of 1 percent of total Medicare spending over that time period. There has been no information from any source since 2010 suggesting that the savings from the readmission provision has escalated into a major cost-cutting reform. In the context of overall Medicare spending, the readmissions provision is simply inconsequential.
But when it comes to health care spending, the picture is starting to look more global. After decades when health spending in the United States grew much faster than it did in other Western countries, a new pattern has emerged in the last two decades. And it has become particularly pronounced since the economic crisis. The rate of health cost growth has slowed substantially since 2000 in every high-income country, including the United States, Canada, Britain, France, Germany and Switzerland, according to data from the Organization for Economic Cooperation and Development.“We used to be different,” said Louise Sheiner, a senior fellow at the Brookings Institution and a former senior economist at the Federal Reserve. “Since about 1990, we’ve looked about the same.”Continue reading the main storyHealth Cost Growth, Slowing Around the WorldThe growth in health costs has slowed in the United States, but it has slowed in other countries, too.Annual growth in per–capita health care costs, 2001 and 2011+6%4%2%0%+5%CanadaFranceGermanyNetherlandsSwitzerlandBritain+1% – U.S.20012011Source: OECDThe synchronized slowdown offers reasons to be skeptical about neat explanations for the trends in any one country, be it local changes in medical practices or Obamacare’s various attempts to slow cost growth.
The inexorable rise of health care spending is an unavoidable problem for both the federal budget and household pocketbooks. The Congressional Budget Office CBO finds in its 2014 Long-Term Budget Outlook that federal health care spending is still on pace to nearly double as a percentage of GDP over the next 25 years. Some recent reports of slower-than-expected growth have prompted optimism that the Affordable Care Act has brought lasting change to the health care industry. Unfortunately, such praise is likely premature. A number of factors may be contributing to the slowdown—such as the economy and changes in the market landscape—but as shown in the chart below, similar periods of slow growth have happened in the past and rarely last longer than a few years.
Hidden in the midst of a 436 page regulatory update, and written in pure bureaucratese, the Department of Health and Human Services asked that insurance companies limit the looming premium increases for 2015 health plans. But don’t worry, HHS hinted: we’ll bail you out on the taxpayer’s dime if you lose money.No wonder there wasn’t a press release. The White House is playing politics with Americans’ health care—and they’re bribing health insurance companies to play along.The administration’s intention is clear: Salvage the 2014 midterm elections. Typically, insurance companies release their premium rates between summer and early fall—i.e., right before voters cast their ballots in November. If premiums skyrocket—which looks increasingly likely—then voters won’t look too kindly on Senators and Representatives who voted for Obamacare and created this problem.
Several studies have estimated that the costs of providing contraceptive coverage are balanced by cost savings from lower pregnancy-related costs and from improvements in women’s health.”Studies the departments cited are suggestive, but far from definitive. A fuller review of the literature on the cost and cost offsets of contraceptive coverage by Daniel Liebman, a colleague, finds that the evidence is thin that, from an insurer’s perspective, contraceptive coverage pays for itself in the long term. Moreover, it almost certainly does not in the short. The cost of contraceptive coverage is immediate, and the possible offsets reduced pregnancies are downstream, often years in the future.
CBO currently estimates that the ACA’s coverage provisions will cost the federal government $92 billion a year by FY2015. This is roughly 0.5 percent of projected U.S. economic output for 2015, well exceeding the relative costs of Social Security and Medicaid at similar points in their histories. The amount falls just short of the proportion of GDP absorbed by all of early Medicare. Worse, the federal fiscal position was far weaker when the ACA was passed than when Social Security, Medicare, and Medicaid were created.
Troubling though the ACA’s startup costs are, they represent only the tip of the fiscal iceberg that will be the fully phased-in law. CBO projects that its annual costs will hit $200 billion by FY2020, or nearly 0.9 percent of GDP. Yet this assumes that lawmakers will be content to allow the ACA’s health insurance subsidies to grow more slowly than low-income beneficiaries’ health care costs, as the law now stipulates. Thus there is every reason to believe that the ACA’s eventual costs will far exceed initial estimates, as happened with Social Security, Medicare, and Medicaid.
Non-citizens granted any sort of legal status by a congressional immigration deal or Executive fiat would immediately become eligible under Obamacare’s Basic Health Program BHP provisions for taxpayer-subsidized, Obamacare-compliant private health insurance plans, with better benefits and lower premiums than U.S. citizens.Such persons could also receive “cost-sharing” subsidies under Obamacare.The Senate comprehensive immigration reform bill, S.744 passed earlier this year, purports but fails to prevent persons newly granted “legal status” from receiving Obamacare subsidies.An HHS final rule issued in March extended Basic Health Program benefits to aliens lawfully present in the country from 0-200 percent of the official Federal Poverty Line FPL when the statute explicitly states that no lawfully present aliens above 133 percent of FPL are eligible.The statute clearly limits who is eligible for the BHP, but HHS’ rule opens the door to others being deemed eligible, contrary to the law, and without congressional approval.
In two years, the ACA’s structural problems will lead to substantial premium increases. Once that happens, North Carolinians will likely leave the insurance market in droves. They’ll have little choice – they won’t be able to afford health insurance because federal subsidies won’t keep up with the rapid price increases. Within a decade, this could swell the ranks of the state’s uninsured by 57 percent.This isn’t baseless speculation. I reached this conclusion by using a peer-reviewed economic model published in several health journals. It was funded by both private and government sources, including the Department of Health and Human Services, and has been cited by multiple Supreme Court justices in ACA-related rulings.But why won’t this happen until 2017? Because that’s the year the Affordable Care Act goes into full effect and certain temporary provisions begin to sunset. The changes will affect all plans sold for 2017 and beyond.
Insurance companies operating in New York State’s marketplace are expected to ask for double-digit premium hikes next year, according to new filings from the companies. Capital New York reports the average requested increase was 13%. The New York Post reports that number at about 12%. But the bigger insurers are seeking a bigger premium hike — according to Capital, the six most popular plans in New York are requesting an average increase of almost 15%.