• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • CBO: Obamacare Unlikely to Reduce Spending on Health Care

    Yesterday, the Congressional Budget Office released its annual long-term Budget Outlook, which provides a look at mandatory federal spending on health care after passage of the Patient Protection and Affordable Care Act.

    One may have expected to see drastic changes after the passage of Obamacare.  After all, this legislation was supposed to reduce costs and overall health spending.  However, the CBO’s report highlights the unlikelihood that cost-containment strategies included in the new law will ever come to fruition.

    In its projections, CBO looks at two scenarios.  The extended-baseline scenario assumes that current law will occur as written.  The second, more likely occurrence, is the alternative fiscal scenario, which makes realistic assumptions about the future behavior of lawmakers.  For example, the extended-baseline scenario assumes that a 21 percent reduction to physician payments under Medicare will actually occur.  But since its inception in 1997, these reductions have been suspended every year, known as the “doc fix”.  Just days ago, Congress suspended the payment reductions for another six months, and you can be sure they will suspend it again when it expires in the future.  The alternative fiscal scenario accounts for this.

    The extended-baseline scenario shows that by 2035, federal health spending will rise from its current rate of 5.5 percent of gross domestic product (GDP) to 10 percent of GDP in 2035—assuming many of the health care overhaul’s unsustainable provisions actually occur.  The alternative fiscal scenario projects federal health spending to be 11 percent of GDP in 2035—the same that it would have been without Obamacare.  This takes into account the first and second decades of enactment, during which federal health spending is expected to be greater than it would have been under prior law, with an incremental dip in relation to spending under prior law in the third decade.

    What accounts for the difference? The alternative fiscal scenario assumes that politically unpopular cost-containing measures will not occur.  These include cuts to Medicare and reductions in the value of subsidies created for low and middle-income Americans to buy insurance in the new exchanges.  CBO explains that, “It is unclear whether that lower rate of growth can be sustained and, if so, whether it will be accomplished through greater efficiencies in the delivery of health care or will instead reduce access to care or diminish the quality of care.”  Reality: look at the latter possibility.

    And even if Medicare cuts do occur, they won’t be used to strengthen Medicare, as Obamacare proponents have claimed.  CBO writes that, “…the majority of the HI trust fund savings achieved under the legislation through 2019 will be used to pay for other spending and therefore will not enhance the government’s underlying ability to pay for future Medicare benefits.”

    What this report ultimately comes down to is the fact that after increasing taxes, increasing spending, and extending the reach of the federal government into the lives of Americans, Obamacare will do little, if anything, to reduce America’ s health care costs.  CBO makes the point that, in spite of the new law, in the future, “making appropriate changes in financial incentives will probably be critical in developing successful policies to restrain spending growth.  In many cases, the current health care system does not provide incentives for doctors, hospitals, and other providers of health care—or their patients—to control costs.”  This actuality was highlighted by Heritage research before Obamacare passed.

    To truly reform the health care system and reduce growth in spending, reform should result in a system where patients and doctors are encouraged to seek out the best value in care.  To learn about such a system, click here.

    Posted in Obamacare [slideshow_deploy]

    9 Responses to CBO: Obamacare Unlikely to Reduce Spending on Health Care

    1. Billie says:

      everything about Mr. Obama's rescue of health care is nothing but misleading! It is unfair, unpractical discriminating and dictatorial with punishments and penalties. EVERYTHING IS QUESTIONABLE! ESPECIALLY HIS INTENT! REPEAL!

    2. Pingback: CBO: Obamacare Unlikely to Reduce Spending on Health Care | The … | health

    3. Pingback: How to Live a Healthy Lifestyle | Life,Health and Fitness

    4. Lioness, Wisconsin says:

      Why is nobody surprised! "Affordable Healthcare" was never the goal of this government take over of our country. Wake up !

    5. Chas, Santa Rosa, Ca says:

      I just read Edmund F. Haislmaier's (the Senior Research Fellow

      in the Center for Health Policy Studies at The Heritage

      Foundation) suggestions for maximizing the effectiveness of the medical industry. He wrote his long winded piece without stepping in a hospital. Had he spent time doing research in a hospital, he would have learned that doctors are part of the equation. Hospitals compete for Doctors services. Insurance companies reimburse the Docs. Edmund does not understand where the medical costs come from. The biggest cost is labor. How many employees does it take to care for a patient needing diagnostic care? You have all kinds of people caring for a patient because the patients expect miracles. Miracles are not cheap. State of the art equipment is not cheap. And you need state of the art equipment in a hospital or else the Doc will go where the best equipment, best reimbursement and the best staff are. And if every one in the community follows the best Docs to the best hospital, you get more people clogging up one hospital. If you have a 200 bed hospital, you can't add more beds over night to accommodate the 250 people who want to be in that hospital. And that's not mentioning the outpatient or emergency services and the strain it puts on the hospital.

      Americans are free to overeat, and vegetate in front of the TV. Then when they code out with clogged arteries they expect the miracle and all of a sudden they get the services of the angio department, the ER, the ambulance, the radiologists, the medical records dept, the janitor, the recovery nurses, the telemetry nurses, the case manager, the phlebotomy dept, the pharmacy dept, the sterile dept, etc. Where is prevention mentioned in the article? If people took better care of themselves, cut back on smoking and over drinking and dangerous driving habits, and cut out the fat in their diets, if they ate more fruits and vegetables, exercised more and reduced the stress in their lives, you would see real health care reform. You will not see improvements to the system with the faulty theories the Heritage Foundation promotes.

    6. Jeremy, Chicago says:

      @Chas: Prevention is obviously a way to lower medical costs. The focus of this article was on the effect of the new health care laws on spending. Your assessments about costs (which you so eloquently summarized as "miracles are not cheap") are right — and the government's attempts to "control" those costs will inevitably lead to things none of us want: Longer waiting times/death panels, poorer quality care/doctors, less choices about your own body, less advances in technology/research, and HIGHER costs in the end!

    7. Susan M. Noegel says:

      I already know too too many people will line up for this. The physician I used to be involved with is no longer working as a G.P. due to all the paper work involved with the way the new rules have evolved with the new environment. The clinic I have been using is no longer on the list of Providers I have been with for my entire life. So much for keeping you,re own "Doctors" I think it is a big lie.

      I also know it will cost more!! If more people are involved who will pay for all of this.

    8. Pingback: 21 State Lawsuit » Blog Archive » CBO says Obamacare “unlikely” to reduce health care spending

    9. Leon Lundquist, Dura says:

      Thank you Katherine Nix. These guts of Obamacare were written by genuine Communists in the pursuit of saving America with Communism called for in their Indoctrination. Oh, excuse me "education" since indeed the Progressives have won the race to the bottom. Then, Congressmen don't read the Bill, they say "You can't read these Bills!" It's technical language, but when we actually had "High Schools" instead of "High" Schools they called it Precis. It was in the Curriculum and it was power food for the People.

      American Medicine has gone crazy. It was merely nervous and anxious (the high prices, you know) before, but watch the Oil Industry go down. "We don't care" says the destruction of 14,000 Oil Jobs for a 99.999% performance by Big Oil, get that, for being nearly perfect. The good doctors can't think "It can't happen to us!" I blogged on this Site Obamacare was "The horrifying takedown of American Medicine" and that it would "remove all joy from the practice of Medicine." Look at all this wastework at the cost of human life. Is it Soft Murder? The way out of your entitlements bubble is to encourage Americans to die. And when it comes to "graft" in Federal Medicare, and BO care, whatever they are going to call it, take a lesson from Food Stamps. "We made a mistake giving you Assistance, you must pay us $200 instantly." In the Legislation Business, we call that "Overbroad." So for American Medicine it will be "The Procedures used did not qualify, you must pay us $10,000 instantly!" The word, Precis, that covers that ground is "confiscatory." But that's what the Patient gets in the mail just like the notice they give recipients for Food Stamps. And oddly, the greatest Graft in Medical Care goes to Government. Worry about the cost of a NASA toilet seat? Look what is going down this toilet!

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×