Actuaries at the Center for Medicare & Medicaid Services, or CMS, issued a new report this week on the growth of health care costs. Not surprisingly, the Obama administration was quick to spin the release as vindication of the national health care law. "This report provides more evidence that the health care law will help control costs and save money for families while extending coverage to millions of Americans," Health and Human Services Secretary Kathleen Sebelius claimed in a statement. In reality, the new CMS data actually confirms what Obamacare's critics have been saying all along -- that the law will fail to contain health care costs, which was the primary justification for its existence.
Despite Sebelius's claims, the study projected that as a result of Obamacare, health care spending will be $478 billion higher from 2011 through 2021 than it would have been without the law. CMS cautions that its projections "remain subject to substantial uncertainty." If Medicare cuts, which are supposed to help finance Obamacare, don't get implemented, costs will rise far higher.
The law's defenders have argued that the projected increase in national health care spending relative to an alternate universe without Obamacare (representing, on average, about 0.1 percent annually over this time period) is relatively modest considering the law will provide health insurance coverage to 30 million people. But such analysis requires significantly moving the goal posts that President Obama planted when he embarked on his health care crusade.
When Obama started pushing health care legislation in the spring of 2009, he faced a big problem. His $787 billion economic stimulus package, coming on the heels of the $700 billion Wall Street bailout, had ruined Americans' appetites for major spending bills. So, in an act of political jujitsu, Obama responded by selling his health care plan as a fiscally responsible policy. "To say it as plainly as I can, health care reform is the single most important thing we can do for America's long-term fiscal health," Obama declared in a June 2009 speech to the American Medical Association. "That is a fact."
Obama was correct that rising health care costs were adding to the cost of government programs such as Medicare and Medicaid and taking a toll on businesses. But the policy he came up with has only made matters worse.
"[T]he status quo is unsustainable," Obama said in the same speech. Yet under the law he championed, spending over the next decade is expected to actually exceed the status quo he viewed as unsustainable. At the time, Obama went on to warn, "If we fail to act, one out of every five dollars we earn will be spent on health care within a decade." Yet the CMS report predicts that under Obamacare, health care spending as a percentage of GDP is expected to spike to 19.6 percent by 2021 -- in other words, it will represent roughly one in five dollars of the economy.
In the coming weeks, the U.S. Supreme Court will rule on the constitutionality of the health care law. If it is overturned, lawmakers should begin working on real market-based reforms that will actually bring down health care costs.