Health Care Spending Estimates Under Obamacare are Wrong, says New Study

Obamacare or the Affordable Care Act is probably President Obama’s most ambitious piece of reform and one that will enable him to leave a lasting legacy. It was designed to expand access to quality and affordable health insurance and stem the burgeoning growth in US health spending.

When the act was passed, the US and most of the developed world was in the grip of a crippling recession. At that time, the analysts who helped draft the act estimated that health care spending would touch $4.6 trillion by 2019. But a recent study has disputed those numbers.

All major sectors were affected by the recession, including health care spending. So it was natural to think that when the economy recovered, heath care spending would also rise. But in the years after 2010, there was only a modest increase in annual health care spending. This prompted the Urban Institute to say that the health care spending probably won’t cross $4 trillion by 2019.

Speaking on the matter, Robert Wood Johnson Foundation senior adviser, Katherine Hempstead said that when the number were crunched, it was assumed that health care spending had slowed down because of the recession and that we would eventually return to higher rates of growth. That did not happen.

There was a brief uptick in health care spending growth in 2014 but it didn’t sustain. If it goes on like this, it will become increasingly difficult to say that the slowdown was due to the crawling economy and not because of the cost containment policies initiated by Obamacare.

So when the Affordable Care Act targeted some conditions where re-admissions rates were high, readmission rates for those conditions fell but not for others. This confirms that a large number of those re-admissions were probably not required. It remains to be seen how the results of the new study affect policy making under the Affordable Care Act.

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