Medicare Actuaries: Health Care Costs Will Go Up, White House: Health Care Costs Will Go Down, and the I-Never-Took-Economics Quote of the Day

Medicare’s Office of the Actuary:  The nation’s health care tab will go up — not down — by $265 more per person in 2019 as a result of President Barack Obama’s sweeping health system overhaul.

Estimate is optimistic: It presumes a 30 percent reduction in Medicare physician payments takes effect over the next two years.

White House (Nancy-Ann DeParle): Costs will go down, not up, by $1,400 per person.

Understatement of the day:  “When you cover the uninsured and they get the care they need, you have to spend more money.” — Karen Davis

I-never-took-economics quote of the day:  “Insurers are using the consumer protections in health reform as a cover for their own greed.” — Pete Stark

Comments (8)

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  1. Bruce says:

    Am I supposed to be surprised that costs are going up. I’m not.

  2. Ken says:

    In addition to the 30% cut in doctor fees, they are assuming all kinds of other Medicare fee cuts. The seniors will vote them out of office before this ever happens, however.

  3. Joe S. says:

    This estimate is too optimistic.

  4. Vicki says:

    I’ve always thought Pete Stark was a jerk. That opinion is confirmed once again.

  5. Devon Herrick says:

    The CMS Actuaries predict the government share of medical spending will climb to 51% by 2019 (up from around 48% to 49% today). About two years ago the government’s share was only 46%

    They also estimate that out-of-pocket spending will fall to 9.6%. People paid nearly 15% of their medical bills out-of-pocket five years to seven years ago.

    In 2009 health care was 17.3% of GDP, which the actuaries predict will rise to 19.6% by 2019.

    The estimated growth rate of National Health Expenditures for the 11-year period (2009 to 2019) is 7.7%. This doesn’t really stand up to closer analysis.

    About 32 million additional people will gain health coverage. These will nearly double their consumption of medical care. Millions of people already covered by insurance will be forced to have coverage with more comprehensive benefits. They will face fewer incentives to control spending.

    The following is the year-by-year increase in National Health Expenditures. As you can see, the estimated growth in spending is probably several percentage points too low.

    2010 5.1%
    2011 4.2%
    2012 5.2%
    2013 6.1%
    2014 9.2%
    2015 7.7%
    2016 7.7%
    2017 7.7%
    2018 7.7%
    2019 7.7%

  6. artk says:

    I’d like a show of hands, who thinks that the difference between the projected 18% of GDP and 19% of GDP 9 years out is outside the margin of error?

    Oh, about that 30% haircut for doctors, why not? Look at your brokerage statement from a decade ago, I’ll guarantee you that brokerage commissions are down more than 30%. Look at the price performance of your PC in the past decade. There’s no reason that health care providers can’t deliver more, higher quality care for a lower cost per unit the way every other part of the economy has done.

  7. John Goodman says:

    I actually agree with artk, for once. Where ever doctors are practicing outside the third-party payer system, their fees are coming down, at least in real terms. Cosmetic surgery and lasik surgery are good examples. In these fields, doctors find ways to become more productive because they compete for patients based on price. There is no reason why we shouldn’t expect this to happen generally — and it would, with the kind of reforms routinely advocated at this web site.

    In the third-party payer system, however, no one competes for patients based on price (or on quality either, for that matter). Doctors will respond to Medicare pay cuts by doubling their efforts in other ways. (More visits, more tests, etc.) Also, the elderly and the disabled will find it increasingly hard to get care, as other patients become relatively more attractive.

    I may be in disagreement with artk on one subtle point, however. I blame the payers for these problems. I suspect artk blames the doctors.

  8. Ken says:

    What difference does it make what the margin of error is, artk? Obama said he would not sign a health bill that does not control health care costs. Yet that is precisely what he did.