WASHINGTON (Reuters) - Reforms will slightly accelerate the rise in healthcare spending, according to a survey released on Thursday, handing Republicans more ammunition as they attack the Obama administration’s legislative victory.
The survey, conducted by U.S. Centers for Medicare and Medicaid Services (CMS) auditors, said the spending bump is modest, and the more dramatic change is in how money is spent as roughly 32 million Americans gain coverage.
Government researchers said U.S. healthcare spending will rise at an average annual rate of 6.3 percent over the next decade, reaching almost $4.6 trillion by 2019.
That compares to a prior prediction released in February of a 6.1 percent average annual rise, before health reform was passed.
But the CMS said they expect the sharp changes to come in the type of spending -- not only curbing Medicare costs but also pumping more money toward the private sector -- as the bulk of the recently passed law starts taking effect in 2014.
Medicare is the U.S. government’s health insurance program for the elderly and disabled.
“The overall net impact is moderate,” said Andrea Sisko, a CMS actuary who helped analyze the data. “But when you peel back the onion and you start looking underneath the surface, you start to see a much more pronounced impact on payers.”
The study is just one of a slew being pumped out ahead of the November mid-term elections as Democrats hail healthcare reform as a legislative victory and Republicans decry “ObamaCare” as a taxpayer burden that destroys jobs.
Another study found most U.S. adults still confused about when to expect health care changes.
A third study showed having more primary care doctors available -- an issue addressed by healthcare reform -- does not necessarily translate to healthier patients.
The confusion hands lawmakers a chance to shape public perception of healthcare to their political liking, especially because it will take years for most of the reforms to take effect.
Rhetoric around the new law grew heated on Thursday. U.S. health secretary Kathleen Sebelius warned insurers against blaming the reforms for premium increases.
“There will be zero tolerance for this type of misinformation and unjustified rate increases,” Sebelius wrote in a letter to the insurers’ trade organization.
Karen Ignagni, president of the America’s Health Insurance Plans organization, said in a statement that the new law requires coverage that includes new benefits.
“It’s a basic law of economics that additional benefits incur additional costs, and the impact on premiums depends on the type and amount of coverage policyholders had before,” Ignagni said.
The CMS study, published in the journal Health Affairs, analyzes the reforms’ impact using modeling to project people’s behavior on coverage and spending.
Reduced payments for most Medicare services and doctor visits as well as cuts to private Medicare Advantage insurance plans will help lower costs, though a provision to cover more of Medicare patients’ drugs will increase spending.
Additionally, millions of people are expected to gain health insurance, driving up spending.
By 2019, nearly 93 percent of the U.S. population should have coverage, researchers said. Now, more than 40 million people in the United States lack insurance, but 32.5 million should get coverage, the study found.
“There’s definitely going to be a larger demand for services in 2014,” said John Poisal, deputy director for CMS’s National Health Statistics Group, which made the projections.
The bulk of the health reforms take effect in 2014, including a provision that requires Americans to buy health insurance or pay fines.
Most uninsured will gain coverage through expanded joint federal-state Medicaid programs for the poor or on their own through state-based exchanges.
Nearly 16 million people will buy health insurance from private companies through the exchanges in 2014, growing to more than 30 million by 2019, the study showed. That would nearly double the amount of money spent on healthcare for such consumers while also helping to reduce prices, it said.
Provisions for immediate insurance coverage for high-risk patients and requirements to extend coverage to young adults up to age 26 are expected to cost $10.2 billion through 2013.
Out-of-pocket expenses are anticipated to rise amid new excise taxes on high end, so-called Cadillac health insurance plans and employer cost-shifting to workers, CMS found.
Despite the underlying shifts, however, U.S. healthcare costs will continue to rise considerably, reaching $4.6 trillion by 2019 from $2.6 trillion in 2010. That amounts to 19.6 percent of the nation’s gross domestic product. Healthcare is already expected to reach 17.5 percent of GDP this year.
It is still unclear how people and businesses will react to the changes, and whether there are enough doctors and facilities to absorb any increased demand.
(Editing by Jerry Norton and Carol Bishopric)
additional reporting by Lewis Krauskopf in New York