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March 23 2016

Today's Sardonic Laugh: Obama Administration Claims Credit for Medicare Cost Savings

Patrice J. Lee

The Obama Administration is once again trying to take credit where credit is not due. On the sixth anniversary of ObamaCare they are pushing the narrative that ObamaCare has slowed the growth of healthcare spending on Medicare. Yet, they ignore one big factor that has nothing to do with the president’s un-Affordable Care Act.

Health and Human Services (HHS) released a report with lots of graphs and numbers. It finds that national healthcare spending increased moderately in 2014 by 4.3 percent – slower than expected. Medicare spent $473.1 billion less on personal healthcare from 2009 to 2014 than it would have if the previous eight years’ growth rate continued. We are expected to applaud.

The growth in hospital spending on in-patient services was also slower than for outpatient/ambulatory service growth in Medicare. However, spending on prescription drugs is not slowing down anytime soon, but actually increased 9.1 percent in 2013 and 13.7 percent in 2014. That’s only expected to grow.

HHS Secretary Sylvia Matthews Burwell was quick to tout this as success:

“Thanks to the Affordable Care Act, we are putting the patient at the center of care and spending our dollars more wisely by paying for what works,” said HHS Secretary Sylvia M. Burwell. “This kind of progress is not easy, but what we have accomplished in six short years is undeniable: from 20 million uninsured, to billions of dollars saved, to changes that are making our health care system work better for everyone.”

The problem is the economy probably has more to do with any slowdown in spending than ObamaCare. A healthcare blog explains:

The ASPE report does not claim that the ACA was responsible for all of the decrease in spending growth over the past half decade. It recognizes that the slowdown in spending since 2009 has been driven by a number of factors unrelated to the ACA: the slow recovery from the recession, expiring prescription drug patents and a corresponding increase in the use of generic drugs, ongoing shifts in the site of care from inpatient to outpatient settings and to prescription drugs, and a greater emphasis on enrollee cost sharing in private insurance plans. But the report asserts that some credit must be given to the ACA for reductions in Medicare provider payment updates and Medicare Advantage payment rates, purchasing reforms, increase program integrity efforts, state Medicaid cost containment, and shifts in coverage to public programs which have also contributed to slowed expenditure growth.

That aside, slower spending on Medicare represents a pixel of the larger healthcare spending picture and that image is far from the masterpiece the Administration would like for it to be.

Total government spending is a more accurate picture and we see that as taxpayers we continue to shell out more on public programs. Heritage’s Robert Moffitt puts this into perspective for us:

Centers for Medicare and Medicaid Services data show that total per capita health insurance spending will rise from $7,786 in 2016 to $11,681 in 2024. Looking at the future of employer-based health insurance costs, the Congressional Budget Office (CBO) projects that job-based premiums are poised to increase by almost 60 percent between now and 2025.

Courtesy of the Affordable Care Act, public spending is outpacing private spending. For 2015, the Congressional Budget Office reports that the federal government spent a total of $936 billion on health programs (for example, Medicaid, Medicare, and the Affordable Care Act), a 13 percent increase over the 2014 level.

For 2015, the Congressional Budget Office reports that Medicare spending increased almost 7 percent, the fastest rate of growth since 2007; and, over the period 2013 to 2015. They also report that Medicaid spending alone jumped by 32 percent.

Let’s not forgot that costs incurred by individuals because of ObamaCare has only risen from double-digit premiums and deductibles to other out-of-pocket costs.

The Obama Administration will do its very best to try weave a positive narrative of President Obama’s legacy, but if he truly wanted to make healthcare more affordable and accessible while decreasing national spending on healthcare, ObamaCare was not the way to do it. You can’t central plan your way to lower costs or better value.

 

 

 

Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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