CMS Confirms ObamaCare Will Increase Spending
The Centers for Medicare and Medicaid Services (CMS) released a new analysis of ObamaCare, confirming that our nation's health care costs will increase rather than decrease under ObamaCare and violating a pledge President Obama made repeatedly to the nation.
CMS concluded:
- Uninsured and those employers who don't offer coverage will pay $120 billion in taxes.
- National health care expenditures will increase by $311 billion.
- Health care increases to 21 percent of GDP by 2019.
- ObamaCare spends more than $828 billion for health care coverage. (CMS didn't analyze all the tax increases, such as HSAs, FSAs, increasing the AGI threshold, etc.)
- The government will spend $410 billion to expand Medicaid.
- Medicaid enrollment increases by 20 million new beneficiaries.
- 18 million people will be uninsured (excluding 5 million illegal immigrants).
- 50 percent of seniors will lose their Medicare Advantage plans.
- Some of the Medicare cost-control mechanisms may not be sustainable.
- Community Living Assistance Services and Supports (CLASS) will run a deficit in 15 years.
- The $5 billion for High Risk Pools is not enough.
- Doctors may drop out of Medicare because of the changes in Medicare reimbursement rates.
- Medicare "savings" may be difficult to achieve.
Summary of CMS Report on ObamaCare
National Health Expenditures
- $311 billion increase in total health care spending
- Health care will be 21 percent of GDP in 2019 - up from 16 percent today and was projected to be 20.8 percent in 2019 pre-ObamaCare.
Cost for Coverage
- $828 billion total for health care coverage, including $410 billion for Medicaid and CHIP
- CMS did not score or analyze all the tax increases in H.R. 3590 and H.R. 4872.
Medicare
- $ 575.1 billion in Medicare changes, including:
- $145 billion in Medicare Advantage plan changes
Medicaid Expansion
- $410 billion in new Medicaid spending
- 20 million total new Medicaid and CHIP dependents:
- 18 million new dependents
- 2 million will supplement their employer plan with Medicaid coverage
Insurance Coverage
- 18 million people still uninsured
- $120 billion tax increase on the uninsured:
- $33 billion on individuals
- $87 billion on employers under "play or pay" penalties
- 14 million people would lose their employer coverage
- 13 million people will get coverage from their employer
- Net total of 1 million fewer people covered under employer-provided insurance by 2019
Seniors Dropping Coverage
- 50 percent would lose their Medicare Advantage plans
- Only 7.4 million seniors covered in 2017 (first full year of MA implementation)
Community Living Assistance Services and Supports (CLASS)
- No benefits during a five-year vesting period
- After 2025: benefits paid out exceed revenue paid in.
High Risk pools
- Only 375,000 people covered
- $5 billion will run out within two years
Excerpts from CMS report:
On National Health Expenditures (NHE):
"In aggregate, we estimate that for calendar years 2010 through 2019, NHE would increase by $311 billion..." Page 15
On the Financial Impact:
"...most of the coverage provisions would be in effect for only 6 of the 10 years of the budget period, the cost estimates shown in this memorandum do not represent a full 10-year cost for the new legislation." Page 2
On Medicare Payment Changes:
"Thus, providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries)." Page 10
"Simulations by the Office of the Actuary suggest that roughly 15 percent of Part A providers would become unprofitable within the 10-year projection period as a result of the productivity adjustments." Page 10
"...reductions in payment updates to health care providers...are unlikely to be sustainable on a permanent annual basis." Page 20
On Medicare's Independent Payment Advisory Board:
"The Board will be charged with recommending changes to certain Medicare payment categories in an effort to prevent per-beneficiary Medicare costs from increasing faster than the average of the CPI and the CPI-medical for ‘implementation years' 2015 through 2019." Page 10
"In general, limiting cost growth to a level below medical price inflation alone would represent an exceedingly difficult challenge." Page 10
"... further reductions in Medicare growth rates...may be difficult to achieve in practice." Page 20
On Medicare Advantage Coverage:
"We estimate that in 2017, when the MA provisions will be fully phased in, enrollment in MA plans will be lower by about 50 percent (from its projected level of 14.8 million under the prior law to 7.4 million under the new law)." Page 11
On Controlling Medicare Costs:
"...the growth rate reductions from productivity adjustments are unlikely to be sustainable on a permanent annual basis, and meeting the CPI-based target growth rates prior to 2010 will be very challenging as well." Page 12
On Prevention and Wellness:
"There is no consensus in the available literature or among experts that prevention and wellness efforts result in lower costs. Several prominent studies conclude that such provisions - while improving the quality of individuals' lives in important ways - generally increase costs overall." Page 13
On CLASS:
"...in 2025 and later, projected benefits exceed premiums revenues, resulting in a net Federal cost in the longer term." Page 14
"In general, voluntary, unsubsidized, and non-underwritten insurance programs such as CLASS face a significant risk of failure as a result of adverse selection by participants." Page 15
"As discussed in the section on the CLASS program, we believe that there is a very serious risk that the program, as currently specified, will not be sustainable because of adverse selection." Page 20
On High Risk Pools:
"By 2011 and 2012, the initial $5 billion in Federal funding for this program would be exhausted, resulting in substantial premium increases to sustain the program; we anticipate that such increase would limit further participation." Page 16
On Medical Device, Drug, and Insurance Company Taxes:
"We anticipate that these fees and the excise tax would generally be passed through to health consumers in the form of higher drug and device prices and higher insurance premiums..." Page 17
On Access to Care under Medicaid:
"Therefore, it is reasonable to expect that a significant portion of the increased demand for Medicaid would be difficult to meet, particularly over the first few years." Page 20
For additional information, contact:
The House Republican Conference Policy Office
