Health Care Cost Trend Hits Historic Lows, But Does the ACA Get the Credit?

By Neal Learner - November 4, 2013 Medical cost trends have dropped to historically low levels in recent years. While President Obama has credited the Affordable Care Act for helping to slow the growth rate in medical spending, others counter that the trend is a lingering effect of the 2008 recession, and that the ACA will, in fact, drive up costs going forward. Still, many experts note that certain ACA provisions, such as financial penalties on hospital readmissions under Medicare, have played a role in moderating health care spending. Among recent reports documenting the lower cost trend: • CMS on Oct. 28 said that health care reform efforts are “eliciting significant out-of-pocket savings for Medicare beneficiaries,” and that there will be “zero growth” in 2014 Medicare Part B premiums and deductibles, as well as more than $8 billion in cumulative savings in the Medicare Part D drug coverage gap known as the “donut hole.” • The liberal Center for American Progress on Oct. 21 said that “intense price competition among health plans in the marketplaces for individuals has lowered premiums below projected levels,” and as a result, the federal government will save about $190 billion over the next 10 years. • The 2014 Segal Health Plan Cost Trend Survey on Oct. 10 said the health plan cost trend rates show the slowest growth in 14 years of trend forecasts. For example, the 2014 HMO trend rate projection is 7%, nearly a percentage point lower than HMO projections from 2013 (7.9%). • The CMS Office of the Actuary in the September issue of Health Affairs said the health spending growth rate in 2013 was near 4%. And the expected growth for 2014 is 6.1%, with an average projected growth of 6.2% per year thereafter, the study said. • The nonpartisan Health Care Cost Institute on Sept. 24 said “health care cost growth remained historically low” in 2012, growing 4.0%, slightly lower than the 2011 rate of 4.1%. The effect of the ACA on medical costs is still evolving, says one insurance executive. “It’s fair to say the ACA has some impact on health care costs in both directions,” notes Andrea Walsh, executive vice president of HealthPartners, a Minnesota-based not-for-profit insurer. “In some cases the ACA provisions will help signal the slowing of health care costs that we need to see in this country. And with other provisions, the changes will increase health care costs. It’s not a simple answer.” Joseph Fifer, president and CEO of the Healthcare Financial Management Association, notes that roughly 5% of a health plan’s membership typically accounts for roughly 50% of all medical claims, and that most of the dollars go to managing chronic conditions. Fifer contends this fact doesn’t get enough attention. “What if we focused on much better and much more coordinated care for them?” he says of these members. “Wouldn’t we get a better result for them and a lower cost structure, or take some of the pressure off of the cost side? Where most of the dollars are spent is not getting the attention.” Question: How does the ACA factor into the cost trend, and what factors could really bring costs down? http://aishealth.com/blog/health-reform/health-care-cost-trend-hits-historic-lows-does-aca-get-credit?utm_source=Real%20Magnet&utm_medium=Email&utm_campaign=27842997