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President Barack Obama, Vice President Joe Biden, and senior staff, react in the Roosevelt Room of the White House, as the House passes the health care reform bill, March 21, 2010. (Official White House Photo by Pete Souza)..This official White House phot
The Committee for a Responsible Federal Budget has crunched those great Obamacare numbers from the Congressional Budget Office last month, and has figured out that there will be a $900 billion slowdown in federal health care spending, and it pinpoints where those savings come in.
Chart showing categories for slowed federal health care spending.
That big $710 billion chunk in the above graph represents an expected reduction in health spending, compared to previous estimates, because of the slowed growth in health care costs over the last four years. Until about 2010, health care spending grew at a much greater rate than overall economic growth. That's changed, and it's now increasing at about the same rate as the general economy. Exactly why it's slowed so much isn't easy to pinpoint. The great recession and continued economic woes mean people are foregoing health care. But Obamacare has actually played a good part in that.
Buoyed by a 23 percent drop in the cost of Medicare Part D and a 15 percent decline in the projected costs of the Affordable Care Act's (ACA) new coverage through Medicaid and the exchanges, this remarkable slowdown has been a bright spot amidst an otherwise still dim fiscal outlook.

While the slowdown has garnered much attention, much less writing has focused on pinpointing where the downward revisions have occurred. Relative to the size of the program, the largest reduction actually occurred in Medicare Part D, with nearly the largest nominal dollar reduction in spending despite being very small compared to major federal health care programs. This downward revision is in large part due to the broader slowdown in prescription drug costs stemming from the so-called "patent cliff," as a number of widely used, high-cost drugs have come off patent recently. The program's costs have also consistently been revised downward since its implementation.

One of the things this data analysis can do is point the way to where further reforms might be most effective. For example, that Medicare Part D—prescription drug coverage—23 percent reduction is really, really big. Just think what the federal government could save there if it could negotiate drug prices for Medicare like it does for the Veterans Administration.

Even with the expected increase in the rate of health care spending this year—millions of people now gaining insurance and using it will increase spending—the outlook for Obamacare and for health care spending looks pretty good for the next several years, perhaps a decade. That doesn't preclude further reforms, because we're still spending an insane amount of money on health care in this nation, relative to every other developed country on Earth. But it should buoy up policymakers, and encourage them to keep going with the reform.

It also, by the way, is another nail in the Republican's anti-Obamacare coffin. That's always a good thing.

Originally posted to Joan McCarter on Wed May 07, 2014 at 11:43 AM PDT.

Also republished by Obamacare Saves Lives and Daily Kos.

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Comment Preferences

  •  Tip Jar (30+ / 0-)

    "The NSA’s capability at any time could be turned around on the American people, and no American would have any privacy left, such is the capability to monitor everything. [...] There would be no place to hide."--Frank Church

    by Joan McCarter on Wed May 07, 2014 at 11:43:52 AM PDT

  •  How much of the savings are due to states (1+ / 0-)
    Recommended by:
    Roadbed Guy

    not expanding Medicaid?

    "let's talk about that" uid 92953

    by VClib on Wed May 07, 2014 at 11:52:20 AM PDT

  •  That's a strange use of "pinpoints" (2+ / 0-)
    Recommended by:
    Roadbed Guy, JJ In Illinois

    "Other changes" is a huge, vague chunk.

    I'm unsure how good any projection is going to be... we'll wait and see, I guess.

    •  Yes, it seems like projections of this type (1+ / 0-)
      Recommended by:
      JJ In Illinois

      are almost instantly out of date once they make it through the slow-moving CBO machinery.

      For example:  Health care spending growth hits 10-year high runs counter to the general gist of this diary . . . .

      •  Both are true (2+ / 0-)
        Recommended by:
        hbk, FindingMyVoice

        The story states plainly that costs are now going up at the general rate of inflation, where they used to go up faster.

        Back off, man. I'm a logician.—GOPBusters™

        by Mokurai on Wed May 07, 2014 at 01:22:51 PM PDT

        [ Parent ]

        •  Huh? Not the link that I gave . . .. (1+ / 0-)
          Recommended by:
          JJ In Illinois

          which made it clear that health care is now a major driver of inflation:

          Expenses for health care rose at a 5.6% annual rate in the fourth quarter, the Bureau of Economic Analysis said last week. The jump triggered a sharp upward revision in the government's estimate of consumer spending overall and accounted for nearly a quarter of the economy's 2.6% annualized growth in the last three months of 2013.
      •  This graph is projected government spending only (0+ / 0-)

        The article you linked discussed overall healthcare spending by everyone.

        Yeah.. I looked at the title of this diary and went "Huh?"  I was thinking about this same news from last month that you posted a link to.  Both cannot be true.

        These ten year projections are not worth much anyway.  I wonder if these numbers were run before this upward revision of overall spending.  Or - if government spending is fixed and all the increased spending will be borne by citizens privately.

      •  The USA today article is probably misleading (0+ / 0-)

        See here:

        And here:

        Note the latter post, which links to the former, is from the authors of the report on which the USA today article was based.

        Also note in particular that the flash GDP estimates are often based on, well vapor.  Employment, prices, and utilization haven't shown big upward trends yet, although there are some indications of an uptick in hospital revenues, possibly due to pent up demand from previously uninsured people.

        Reporters put out sensational crap based on ultraweak or misinterpreted stats like that all the time -- we don't have to believe it.

  •  You should not automatically assume (6+ / 0-)

    that increased coverage will result in increased costs. There are well-known offsetting factors. Here are just a few.

    ER use is down significantly among the newly-insured. Some hospitals set up enrollment groups in their ERs to get patients covered on the spot. This will lead to a decreasing rate of ER and whole hospital closures caused by unreimbursed ER care.

    The hospital readmission rate is down.

    Infections and injuries in hospitals are down.

    Serious diseases are being discovered and treated earlier, or prevented entirely.

    Preventable chronic disability will be sharply reduced.

    Work is being done to identify useless tests and procedures, and overcharging.

    There is a move toward fee-for-outcome rather than fee-for-service.

    Overall, we know that other countries pay half of what the US does for much better average care. We have only started on the process of identifying the possible savings, and determining how we can implement them. Such as taking the House and putting through permission for Medicare to negotiate drug prices.

    Back off, man. I'm a logician.—GOPBusters™

    by Mokurai on Wed May 07, 2014 at 01:32:08 PM PDT

    •  ER use goes up with Medicaid enrollees (0+ / 0-)

      What you said is simply not true as far as ACA goes:

      ER use is down significantly among the newly-insured. Some hospitals set up enrollment groups in their ERs to get patients covered on the spot. This will lead to a decreasing rate of ER and whole hospital closures caused by unreimbursed ER care.
      Medicaid Expansion Boosted Emergency Room Visits In Oregon, Study Finds
      A new study of a 2008 expansion of Oregon's Medicaid program showed those with new coverage used emergency rooms 40 percent more often than other adults, throwing some water on the long-held argument that expanding Medicaid coverage lowers ER usage and boosts primary care visits.
      So, since most newly insured under ACA are in the Medicaid programs, we can expect to see an increase in ER usage, not a decrease.
      •  Apparently the Massachusetts experience (0+ / 0-)

        Was that ER use and various other medical care expanded for the first year or two, and then decreased dramatically, as some existing problems were treated and medications prescribed and adjusted.

        So the real question is, "What is the long-term trend in the use of the ER and other emergency facilities?"

        •  Yeah.. we need to wait and see.. (0+ / 0-)

          but, once again, the majority of newly insured are in Medicaid.  There may be a few million who got insurance through private insurers that did not have insurance before.  But, we simply do not know the numbers.  HHS conveniently forgot to collect that info - the one metric ACA was sold on to America.

          If the Oregon study results hold true for new Medicaid enrollees through ACA, ER visits will likely go up.

          We'll see.

  •  First step? (1+ / 0-)
    Recommended by:

    In reforming the "health care industry" ....
    imagine how much better America would be if we took a first step towards reforming the "financial industry"

    Big Money Vampires should not be allowed to bleed America to death, no matter where they lurk.

  •  article in news yesterday about longer lives (0+ / 0-)

    from health care, wish I'd saved it, but people with insurance, even Medicaid are living longer.

    and water is wet, but it's good to have that to statistical club the repub governors with.
    Less medical bankruptcies keeps people in their houses and more stable communities, just doesn't quite get their real estate churned so often benefiting the new real estate holding companies attempting to reap the harvest of these bad policies.

    And we haven't even got to the greater benefits of single payer yet, this is just getting people in the insurance pool and some health care.

    This machine kills Fascists.

    by KenBee on Thu May 08, 2014 at 12:43:04 PM PDT

  •  AW CRAP. Now You Just KNOW What RW Headline (2+ / 0-)
    Recommended by:
    FindingMyVoice, Wildthumb

    is coming:

    Obama death panel slashes 1 trillion from your health care!

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Thu May 08, 2014 at 01:02:14 PM PDT

  •  10 year basis (0+ / 0-)

    In the interest of clarity and honesty, you might want to add that the $900B is over ten years. Still, a remarkable savings.

  •  Nothing to see here. (1+ / 0-)
    Recommended by:

    Can we please talk about Benghazi?

  •  These projections are little better than a 10 day (1+ / 0-)
    Recommended by:
    JJ In Illinois

    weather forecast and tend to work on the idea of 'if everything remains the same' but nothing ever remains the same.

    The overall cost of the ACA will surely go up as popular opinion give it a thumbs up and those on the right start buying in. Many of these people will need some subsidy and as the middle class shrinks those numbers will continue to rise.

    My only issue with the ACA is the built in profit margin as a percent of total revenue. It makes increasing costs a benefit to the insurers and since the gov is going to pay what ever people can't afford, its going to be one big gravy train.

    Image you could set up a business where the government made it mandatory to buy your product and would cover those who couldn't afford it and you got to keep a clean 20% over all costs. It doesn't mater what those costs are because the bigger they get the more money you make. It a silly design much on par with congress being able to vote themselves raises.

    Thats not a business its a guaranteed fortune for life. Insurance companies aren't like the tech sector where a lot of innovation comes from the private side due to its profitability. Insurance companies add no benefit to the system they just milk a piece of it.

    We have to really make sure the costs are kept down at all levels or the entire package will end up being an albatross around the neck of an ever shrinking middle classes tax burden.

    Maybe this could be a good thing in the long run because it will force a single payer system to keep everything from falling apart.

    We shall see...

    Join the DeRevolution: We are not trying to take the country, we are trying to take the country back. Get the money out of politics with public financed campaigns so 'Of the People, By the People and For the People' rings true again.

    by fToRrEeEsSt on Thu May 08, 2014 at 01:10:28 PM PDT

  •  Patents running out? (0+ / 0-)

    After the big headline, we see that the biggest factor is that some drug patents are running out?

    That's not exactly going to convince anyone that Obamacare is having any positive effect.

  •  Benghaaaaazi! (0+ / 0-)

    I'm sure Republicans and Fox will have only one thing to say about this great news about Obamacare .... BENGHAAAAAZIIIII!

    Ginny Mayer, Ph.D. Democrat CA State Senate Candidate - SD-35 (Orange County)

    by Ginny Mayer on Thu May 08, 2014 at 01:22:47 PM PDT

  •  Dems running for re-election: are you (0+ / 0-)

    listening! So run with it!!!!!!!!!!!!

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