Obamacare: A little more spending for a lot more coverage

WASHINGTON (AP):

The United States health-care tab will go up - not down - as a result of President Barack Obama's sweeping overhaul. That is the conclusion of a government forecast Thursday, which also predicts the increase will be modest.

The average annual growth in health care spending will be just two-tenths of 1 percentage point higher up to 2019 as a result of Obama's remake, said the analysis. And that is with more than 32 million uninsured Americans gaining coverage because of the new law.

"The impact is moderate," said Andrea Sisko, an economist with the nonpartisan unit that prepared the report.

Factoring in the law, Americans will spend an average of US$13,652 per person a year on health care in 2019, according to the actuary's office. Without the law, the corresponding number would be US$13,387.

That works out to US$265 more with the overhaul.

The big-picture numbers are US$4.6 trillion with the overhaul in 2019, and US$4.5 trillion without it. The US will spend US$2.6 trillion on health care this year.

The new bottom line is guaranteed to provide ammunition for both sides of a health care debate that refuses to move offstage. Republicans are vowing repeal if they win control of Congress this November, although they are unlikely to have enough votes to override an Obama veto.

Cost problem not solved

For critics, the numbers show that the law did not solve the cost problem, although Obama repeatedly said he wanted to bend the spending curve down.

The analysis found that health-care spending will grow to nearly 20 per cent of the economy in 2019. That siphons off resources that could be invested in education, research, transportation or other areas. Medical costs now account for about 17 per cent of the economy, and some experts think that is already too much.

"We really haven't trimmed health-care spending," said Robert Bixby, executive director of the Concord Coalition, which advocates for reducing the federal deficit. "Even if we found a way to provide more people with coverage, we still have the same fiscal problem we always did. Frankly, it's a little bit more difficult to solve now, because we have made a major new commitment."

Bixby's group raised concerns about the cost of the health care legislation but did not oppose it.

For advocates of the law, the numbers show that expanding coverage to 93 per cent of eligible Americans comes at a relative bargain price. Moreover, if Congress sticks to cost controls in the legislation, there is potential beyond 2020 to rein in the growth of health-care spending. The new projections show a slowdown starting around 2018.

"By the end of the projection period, we estimate (costs) will grow more slowly."