Health Care Costs

Today, the Centers for Medicare & Medicaid Services (CMS) Actuary testified before the House Budget Committee and reiterated his views about the Affordable Care Act. His testimony reaffirmed that millions of previously uninsured Americans will gain coverage, Medicare will be stronger, and the rate of health care spending will decrease. But as we’ve noted on the blog in the past, we disagree with some of the Actuary’s other conclusions. Here’s why:

In previous analyses of the Affordable Care Act, the Actuary discounts proposals that other independent experts credit with getting at the root causes of health care cost growth.  The Affordable Care Act, for example:

• Creates new, competitive state-based insurance Exchanges.  Exchanges will enable individuals and small businesses to pool together and use their market strength to buy coverage at a lower cost, the same way large employers do today.
• Establishes ways for Medicare to adopt cutting-edge payment reforms, such as the new Innovation Center. These benefits will spill over to the private sector.
• Creates Accountable Care Organizations and other ways to promote value – so that patients are getting better care not just expensive care. The plan gives health care providers incentives to coordinate care to improve the quality of care as well as efficiency.

These policies will bring down health care costs, but they are undervalued by the Actuary.

The Actuary has also raised concerns that implementing these cost control measures may not be possible. Once again, we disagree. History shows that it is possible to implement measures that will save money for Medicare and the federal government. For example, both the Office of the Actuary and the Congressional Budget Office substantially underestimated the savings that were achieved by the Balanced Budget Act.

These are just some of the reasons why we are confident the Affordable Care Act will help bring down health care costs. And we’re not alone. Health policy experts and economists who have studied the bill agree that the new law utilizes almost all the possible tools to reduce health care costs. Just yesterday, nearly 250 leaders, including two Nobel laureates, for former Council of Economic Advisors members, one former Congressional Budget Office chief, high ranking economists and budget experts signed a letter saying, “The Affordable Care Act contains essentially every cost-containment provision policy analysts have considered effective in reducing the rate of medical spending.”

Our Administration is committed to bringing down health care costs. That’s why we’re moving quickly and carefully to implement the Affordable Care Act and deliver the benefits of reform to the American people.

Stephanie Cutter is Assistant to the President for Special Projects.