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Unspinning the Latest Actuaries’ Report on Health Spending

September 13, 2010 at 4:05 PM

Since last October, the Office of the Actuary at the Centers for Medicare & Medicaid Services has issued several projections of national health spending under various versions of health reform legislation, the most recent of which came out last Thursday.  Each time, health-reform critics have contended that the projections show that health reform won’t slow the growth of health care costs.  And each time (see here, here, and here), we have explained why the critics are wrong.  So here we go again.

As we and others have made clear, health reform will increase national health spending at first, because it greatly expands coverage and insured people receive more health care than uninsured ones.  In its new report, the actuary’s office estimates that the Affordable Care Act will reduce the number of uninsured Americans by 32.5 million by 2019.  The increase in total health spending, however, is very small — only 0.3 percent of gross domestic product in 2019.

More important, health reform aims to slow the growth rate of health costs, generating savings that will grow over time.  The new projections confirm that the Affordable Care Act will modestly reduce the rate of growth of national health expenditures over the 2014-2019 period.  The actuary’s projections don’t extend beyond 2019, but the Congressional Budget Office estimates that, over the following decade, the federal government will spend less on health care than it would have without the new law.