Has The Projected Cost Of Health Care Reform Changed?

The cost of the Patient Protection and Affordable Care Act has changed. It is more expensive. Some advancements have been made and/or are in progress. These, although encouraging, don't offset the increased costs.

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Political pundits continue to argue the advantages and disadvantages of President Obama's health care reform act (i.e., Patient Protection and Affordable Care Act). Early projections of the potential cost were estimates at best and even the Congressional Budget Office estimates of the cost were seriously questioned by most (i.e., proponents thinking they were too high, opponents thinking too low). In a report1 released last week by the non-partisan Congressional Budget Office, the latest projections showed:

  • The Congressional Budget Office and the Joint Committee on Taxation now estimate that the insurance coverage provisions of the Affordable Care Act will have a net cost of just under $1.1 trillion over the 2012–2021 period — about $50 billion less than the agencies' March 2011 estimate for that 10-year period.
  • The Affordable Care Act's provisions related to insurance coverage are now projected to have a net cost of $1,252 billion over the 2012–2022 period (see Table 2 in the report, following the text); that amount represents a gross cost to the federal government of $1,762 billion, offset in part by $510 billion in receipts and other budgetary effects (primarily revenues from penalties and other sources).
  • Fewer people are now expected to obtain health insurance coverage from their employer or in insurance exchanges; more are now expected to obtain coverage from Medicaid or the Children's Health Insurance Program or from non-group or other sources. More are expected to be uninsured.

Whether or not you are for or against health care reform, the projected costs of this program are much higher than initially anticipated. Some of this cost increase is directly tied to the way the program was initially introduced. The Congressional Budget Office completes its analysis over a ten year period. The first few years of the program, once approved, offered limited benefits and changes but started to collect taxes to help fund it. When we look at the program today, those years of no cost are cycled out of the projection with additional years with costs now included. So some of the cost increase should be expected, but there is more to consider.

First of all, costs continue to escalate and it will be harder to "bend the trend" and get the system under control. As initially predicted by some experts, it is more obvious that fewer people will be covered through the exchanges and more groups will be willing to pay the penalty and discontinue their benefit programs. These undesirable changes show some of the flaws of the proposed program.

The President's proposed gross cost of about $900 billion has nearly doubled to $1.76 trillion, with the net cost increasing substantially. Although there are many advantages to the new program, the projected cost is much different than anticipated by those voting for the program. The advantages fail to offset the price tag, but is the price worthwhile? Some recently observed examples in my sphere of influence include:

  • Introduction of Health Information Exchanges: San Diego County is one of the Beacon communities where hospitals are now able to communicate with each other, transferring valuable medical record information to assist with the care in other facilities. A recent study showed that almost 90% of those being readmitted within 30 days of a stay go to a different facility. Oftentimes that facility knows nothing about what happened at that stay and usually orders tests that are unnecessary if they had access to what happened elsewhere. This is now a reality in San Diego County based upon funding from the Patient Protection and Affordable Care Act.
  • Creation of Accountable Care Organizations and Coordinated Care Organizations: Accountable Care Organizations and Coordinated Care Organizations are being developed in many communities. The Patient Protection and Affordable Care Act encouraged providers and risk bearing groups to get together and establish entities that, through the assumption of risk, would be able to impact the cost of care. These are being established all over the country. In Oregon, Governor Kitzhaber recently introduced the Coordinated Care Organization concept and will be establishing these through the State of Oregon as an extension of the Accountable Care Organization concept. Significant activities are underway and progress being made.

Yes, the cost of the Patient Protection and Affordable Care Act has changed. It is more expensive. Yes, some advancements have been made and/or are in progress. These, although encouraging, don't offset the increased costs.

The big question is whether or not the system would have been better without the Patient Protection and Affordable Care Act. This will not likely result in agreement. The big question is, are we moving in the right direction? From my perspective, we need solutions or we will experience financial costs far worse than projected under the recent Congressional Budget Office projections.

1http://cbo.gov/sites/default/files/cbofiles/attachments/03-13-Coverage%20Estimates.pdf

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