Obama Says Health Law Cutting Costs; CBO Chief Isn’t So Sure

Photograph by Andrew Harrer/Bloomberg

Demonstrators in favor of the Affordable Care Act stand outside the Supreme Court building on June 28, 2012.

From Bloomberg Government’s Congress Tracker blog

President Barack Obama said in his State of the Union address that his health-care overhaul is taming costs, though Congress’s top budget advisor isn’t so sure.

Douglas Elmendorf, director of the nonpartisan Congressional Budget Office, told lawmakers that he doesn’t know why once-spiraling costs have slowed in recent years.

“We have not attributed the slowdown to any particular factor like the Affordable Care Act,” he told the House Budget Committee, referring to the law enacted in 2010.

It’s a combination of the slow economy — people spend less on care when they feel strapped — and structural changes in the health-care industry that economists don’t yet understand, Elmendorf said.

“The structural part could have a number of possible causes,” he said.  “One could be providers thinking about the current incipient effects of the Affordable Care Act, but they also are driven by pressures from private insurers. I think providers are driven by their own sense that they’re not providing care in as efficient a way as possible.”

In his speech last night, Obama took credit for the slowdown, telling lawmakers: “Already, the Affordable Care Act is helping to slow the growth of health-care costs.”

Cost increases have been slowing for several years; Medicare grew by just 3 percent, or $16 billion, in 2012, the smallestannual gain since 2000. That helped prompt CBO to ratchet back its projections of future costs. It now anticipates that Medicare and Medicaid will cost $200 billion less in 2020 alone than it anticipated just three years ago.

“That’s a topic that we’re giving a lot of thought to,” said Elmendorf. “I think the right way to summarize the consensus is that we don’t know.”

 

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