More good news for the Affordable Care Act aka “ObamaCare”: it is “bending the cost curve” on the expense of Medicare even more than originally forecast, which is reducing the federal deficit. the New York Times reported this past week, Medicare: Not Such a Budget-Buster Anymore:
You’re looking at the biggest story involving the federal budget and a crucial one for the future of the American economy. [use the article link for this interactive chart.] Every year for the last six years in a row, the Congressional Budget Office has reduced its estimate for how much the federal government will need to spend on Medicare in coming years. The latest reduction came in a report from the budget office on Wednesday morning.
The changes are big. The difference between the current estimate for Medicare’s 2019 budget and the estimate for the 2019 budget four years ago is about $95 billion. That sum is greater than the government is expected to spend that year on unemployment insurance, welfare and Amtrak — combined. It’s equal to about one-fifth of the expected Pentagon budget in 2019. Widely discussed policy changes, like raising the estate tax, would generate just a tiny fraction of the budget savings relative to the recent changes in Medicare’s spending estimates.
In more concrete terms, the reduced estimates mean that the federal government’s long-term budget deficit is considerably less severe than commonly thought just a few years ago. The country still faces a projected deficit in future decades, thanks mostly to the retirement of the baby boomers and the high cost of medical care, but it is not likely to require the level of fiscal pain that many assumed several years ago.
The reduced estimates are also an indication of what’s happening in the overall health care system. Even as more people are getting access to health insurance, the costs of caring for individual patients is growing at a super-slow rate. That means that health care, which has eaten into salary gains for years and driven up debt and bankruptcies, may be starting to stabilize as a share of national spending.
The chart above highlights the changes. It compares Medicare spending estimates from the Congressional Budget Office since 2006. Every year, the C.B.O. puts out its best guess for what the country will spend on Medicare over the next 10 years. In 2019, the C.B.O. now estimates the United States will spend about $11,300 in 2014 dollars to care for each person in Medicare. That’s down from around $12,700 since 2010, the year the Affordable Care Act became law. Now multiply that number times the 62.5 million people who will be in the Medicare program.
Although the C.B.O.’s forecasters have been off in their projections in the past, there is no reason to assume their estimates are too low now; their prior estimates have both overshot and undershot the real eventual spending numbers. For the last few years, health spending has slowed in such a significant and consistent way that the surprised forecasters can barely keep up.
Some of the recent reductions in Medicare spending are because of differences in estimates about the economy and demographics that affect the program.
And some are because of cuts in health care spending passed by Congress. The Affordable Care Act, in particular, made significant reductions to Medicare’s spending on hospitals and private Medicare plans, to help subsidize insurance coverage for low- and middle-income Americans. The Budget Control Act, which Congress passed in 2011, also made some across-the-board cuts to Medicare spending.
But much of the recent reductions come from changes in behavior among doctors, nurses, hospitals and patients. Medicare beneficiaries are using fewer high-cost health care services than in the past — taking fewer brand-name drugs, for example, or spending less time in the hospital. The C.B.O.’s economists call these changes “technical changes,” and they dominate the downward revisions since 2010.
In all, technical changes have been responsible for a 12 percent reduction since 2010 in the estimates for Medicare spending over the decade ending in 2020. In dollar terms, that’s over $700 billion[.]
[T]he analysts at the Congressional Budget Office say the economy is playing a negligible role in what’s happening in Medicare, meaning that they’re more confident that the practice of medicine really is changing. And those changes, if they persist, will do more to reduce the federal deficit than nearly any policy option budget cutters talk about.
And more good news on “ObamaCare.” The Arizona Capitol Times (subscription required) reported Affordable Care Act leads to growth in health care jobs:
[Arizona’s] jobless rate ticked up one-tenth of a point last month, to 7.0 percent, amid lackluster overall growth of jobs in the private sector and sharp but seasonally expected declines in employment in public education.
And it might have been worse except for one thing: the federal Affordable Care Act.
Aruna Murthy, director of economic analysis for the state Department of Administration, noted that employment growth in the state’s health care industry grew by 1,500 between June and July. And there are 10,100 more people working in that sector of the economy now than a year ago.
Put another way, 15 percent of the total year-over-year job growth in Arizona was in health care. And the vast majority of that, Murthy said, was in employment at doctor’s offices, clinics and other ambulatory care centers.
The employment numbers come amid a report by the Gallup organization showing the number of people who lack insurance has dropped.
That organization said about 20.4 percent of Arizonans lacked health coverage before the Affordable Care Act went into effect this year. The most recent number is 17.2 percent, with Gallup ranking the drop as 19th among all the states.
“Essentially what that’s telling us is, as the number of insured people increase we anticipate continued increase in the demand for ambulatory services,” Murthy said.
She also said that hospital employment is up by 2,600 year-over-year. Yet the number of people working in nursing and residential care facilities – services not really part of the Affordable Care Act – was up by just 500.
Paul Waldman of the Washington Post says Democrats should seize on this good news and go on the attack. On Obamacare, Democrats should attack, not defend:
[S]tate treasurer Doug Ducey won the GOP nomination for governor to replace Jan Brewer in Arizona. Brewer was one of eight GOP governors who accepted the expansion of Medicaid, something Ducey had opposed. Ducey’s comments on the subject are vague at; when asked whether he’d repeal the expansion, he bobs and weaves. And it isn’t hard to understand why.
Looking at this race in combination with other close races, you see that the politics of health care have shifted profoundly in recent months. As Democrats are stroking their chins wondering whether they can turn the Affordable Care Act into a winning issue this fall, and if so how to do it, the answer is simple: Don’t defend, attack.
Meanwhile, those reporting on these races should appreciate that the health care issue isn’t as simple as it was, where Republicans just used it to beat up Democrats. Both sides now have something to gain from talking about health care.
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There’s a paradox at the heart of the politics of the ACA: Americans like almost all the particular things the law does, but a majority disapprove of this thing called “Obamacare” that they only vaguely understand. Which is why Republicans have arrived at a strange (you might even say hypocritical) place, where they promise to repeal Obamacare, even as they mumble support for the law’s general goals and fudge on whether they’d take its benefits away from people. We certainly don’t want insurance companies to deny coverage because of preexisting conditions, they say. And of course low-income people should get help to buy health insurance. In other words, they want to repeal Obamacare, and replace it with most of Obamacare.
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But once they’ve come out for repeal, as nearly every Republican has, they make themselves vulnerable to attacks, particularly now that people are receiving benefits that could be taken away. A Democrat can say of her Republican opponent, “He wants to let insurance companies kick you off your health plan if you get sick,” and though the Republican might say, “Nuh-uh!” it would be true. If the Democrat is using the specifics of the ACA as a cudgel, it’s a very different debate than the one over “Obamacare.”
Which brings us back to Arizona. According to the federal government, the state increased its Medicaid and CHIP enrollment by 225,310 in the open enrollment period that ended in June. That increase of 18.75 percent was just about the same as the average for all states that accepted the Medicaid expansion (18.47 percent). If Arizona had rejected the expansion and seen their enrollment grow at the same rate as the other states that rejected it (only 4 percent), it would have meant 177,119 fewer Arizonans with health coverage.
Saying you’re going to kick a couple of hundred thousand people off their health plans isn’t a recipe for political success. That’s why Doug Ducey is fudging his plans for Medicaid, and why the chances are that if he becomes governor he wouldn’t undo it.
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One Republican candidate after another is fudging his or her actual health care positions, just as Doug Ducey has done on the Medicaid expansion. The problem: Those different races tend to be mostly invisible to people in Washington until somebody puts up an ad we can watch, and it’s true that Dems haven’t aired many ads about the ACA. But that could change soon, and the coverage of this issue ought to reflect the nuances and complexities here. Health care may not be an unequivocal winner for Dems, but they’re discovering that it isn’t a uniform loser and can at times strategically be used to their advantage.