Medical Tuesday Blog
Obamacare Savings Require Rose Colored Glasses
Medicaid savings in the January 2015 projection are due to 10 percent to 15 percent reductions in costs per beneficiary. The same holds for the $51 billion of savings due to lower subsidies to health insurers in Obamacare exchanges. CBO (Congressional Budget Office) notes that cost increases in private and government health plans have been significantly slower than anticipated in previous years, and assumes this will continue. Nobody can fully explain the slower rate of health spending in recent years, but consumer-driven health plans and the Great Recession explain much of it.
This challenges CBO’s long-term projections: CBO now projects real (inflation-adjusted) growth in Gross Domestic Product (GDP) of over two percent per annum though 2025, so it appears imprudent to expect health spending to continue to increase at a recessionary pace. Another challenge is that CBO projects that only 75 percent of enrollees will receive subsidies in 2015 and 71 percent in 2025 (p. 122). However, 87 percent received subsidies in 2014.
Beyond 2019, Obamacare’s spending explodes again. CBO projects the average exchange subsidy per covered enrollee in 2015 will be $4,330 and increase to $7,710 in 2025, an increase of 78 percent in nominal terms (p. 122). In real, inflation-adjusted terms it is an increase of 48 percent (using the CBO’s estimate of future Consumer Price Inflation).
And 2025 is only ten years in the future! We have had Medicare for fifty years, and there is little political will to get its unfunded liability under control. Don’t let the CBO’s rose-colored short-sighted vision lull us into complacency: Obamacare is a long-term spending disaster.
Medical Gluttony thrives in full coverage Government and Health Insurance Programs.
It Disappears with Appropriate Deductibles and Co-payments on Every Service.