The latest analysis of health care reform – out this week from bean counters at Medicare – shows reform will raise health care spending slightly over the next 10 years, not reduce it as promised by President Obama. That won’t make selling it on the stump any easier. Yet there’s a glimmer of hope in the out years of the 10-year projection that the plan will begin to “bend the cost curve.”
Here’s the real bad news for reform supporters. The private insurance market will absorb most of the increase, and most of that will fall on individuals. Employer contributions for their workers’ private insurance will actually fall $120 billion in 2019 from previous projections because of reform.
Individuals will get hit two ways. First, the actuaries at CMS are projecting a huge 9 percent increase in out-of-pocket expenses in 2018 and 2019, after the so-called “Cadillac tax” goes into effect. This is a steep excise tax on high-cost insurance plans. To avoid tax penalties, experts expect employers with such plans – which may only be high-cost because they are filled with sicker and older beneficiaries – will reduce coverage by increasing co-pays and deductibles.
A second factor driving out-of-pocket expenses higher for individuals under reform will be the insurance mandate, which will drive many people to seek coverage through the new state exchanges. CMS predicts over 30 million people will be getting insurance through the exchanges in 2019, substantially more than the 24 million projected by the Congressional Budget Office last March, when reform passed.