Reform to accelerate health care costs

April 28, 2010

The recently passed health reform law would add about 1 percent per year in additional cost growth, according to a new analysis by the Medicare program’s chief actuary.

Richard Foster estimated the new law would raise overall health care spending by an additional $311 million over current law—a higher estimate than Foster made in December when he first examined the legislation.

The bill would insure an additional 34 million Americans, Foster estimated, about 18 million of them through the federal-state Medicaid program. Also, the law’s cuts to Medicare spending would push back the insolvency of the program by 12 years to 2029—although they appear to do so by double-counting those savings, Foster wrote.

One other problem with the lower Medicare payments is that it will likely push 15 percent of hospitals into the red by 2019. Also, patients covered by Medicare and Medicaid might have trouble finding doctors, at least in the law’s early years, as doctors raise prices or cater to patients with private insurance. Foster called those scenarios “plausible and even probable.”

To read Foster’s full report, click here.


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