Health and Science

US could spend $2.6 trillion less on health than original Obamacare estimates

US may spend $2.6T less than expected on health care

A trillion here, a trillion there, and pretty soon you're talking about real money.

The United States is on track to spend $2.6 trillion less on health care over a five-year period than was originally projected after the passage of Obamacare, a new Urban Institute study released Monday said.

The report also said there is evidence that the growth in health spending has again slowed after it spiked in 2014.

It remains an open question whether Obamacare itself is responsible for the slowdown in estimated spending from 2014-19, which represents an 11 percent drop in spending estimates, or whether the overall sluggish economy should get the credit.

The Urban Institute report said that if the savings end up being due to Obamacare, "then slower growth [in national health spending] may persist beyond current projections."

"But if the economy was the primary driver of slower growth, then we should expect a return to faster growth with a robust recovery," according to the report, which relies on data from the federal Centers for Medicare and Medicaid Services, and which was funded by the Robert Wood Johnson Foundation.

In 2010, when the Affordable Care Act became law, federal health regulators estimated that national health spending would top $4.614 trillion by 2019, the report noted.

But now that year is expected to see just $4.02 trillion in health spending — a difference of more than $600 billion, according to the report.

And from 2014 through 2019, the cumulative difference between what is now expected will be $2.6 trillion lower than what was originally projected in 2010 for the same time period, according to the Urban Institute.

The report broke down the factors that are contributing to that dramatic slowdown.

Spending on Medicaid — the joint federal-state health program for the poor — will be $1.05 trillion lower than originally projected during the time span, a 23 percent difference.

"This was partly due to the Supreme Court decision in 2012 that made ACA Medicaid expansion optional for states and significantly reduced enrollment projections," the report said.

Spending on Medicare, the federal health coverage program for the elderly, is expected to be $455 billion less than the 2010 projections.

"One reason is the Budget Control Act of 2011 (i.e., sequestration), which required Medicare payments for all types of services to be reduced 2 percent beginning in April 2013; another reason is the slower than expected spending growth between 2010 and 2014," the report said.

And spending on private health insurance is now projected to be $664 billion less during the time span than original estimates, according to the report.

"Much of this decline was driven by slower spending growth between 2010 and 2014 than had been expected in 2010," the study said. "Contributors to slower growth likely included the sluggish economic recovery as well as lower-than-expected prescription drug spending because of patent expirations and increases in generic drug prescribing," the report said.

"Another likely contributor was a substantial shift toward higher deductibles and cost sharing in private plans, some of which may have been adopted in anticipation of the ACA excise tax on high-cost plans."

Katherine Hempstead, who directs work on health insurance coverage for the Robert Wood Johnson Foundation, said, "If this health spending growth slowdown continues, spending will be trillions less before the end of the decade."