Health-related expenses stemming from the Patient Protection and Affordable Care Act passed in March will initially increase the country’s health costs by just under 1%, but after 2019 those costs have the potential to increase, according to a memo written by Richard S. Foster, chief actuary for the Centers for Medicare and Medicaid Services (CMS).
"We estimate a net Federal savings for the CLASS program of $38 billion during the first 9 years of operations—the first 5 of which are prior to the commencement of benefit payments," the memo states. "After 2015, as benefits are paid, the net savings from this program will decline; in 2025 and later, projected benefits exceed premium revenues, resulting in a net Federal cost in the longer term."
Specifically, the memo notes: "[T]he estimated savings … for one category of Medicare provisions may be unrealistic."
The numbers in question are related to the permanent annual productivity adjustments to price updates for most providers. Though these payment options are expected to increase incentive, the CMS actuary believes that "over time, a sustained reduction in payment updates, based on productivity expectations that are difficult to attain, would cause Medicare payment rates to grow more slowly than, and in a way that is unrelated to, the providers’ costs of furnishing services to beneficiaries."
For providers with a significant number of Medicare patients, it may not be possible to "improve their own productivity to the degree achieved by the economy at large," according to the memo, leading the clinicians to end their participation in the program and possibly jeopardizing access to care for beneficiaries.
Another area of concern addressed in the document is the impact on those enrolled in Medicare Advantage (MA).
"The new provisions will generally reduce MA rebates to plans and thereby result in less generous benefit packages," Foster wrote in the memo. "We estimate that in 2017, when the MA provisions will be fully phased in, enrollment in MA plans will be lower by about 50 percent (from its projected level of 14.8 million under the prior law to 7.4 million under the new law)."
In response, the Department of Health and Human Services Secretary Kathleen Sebelius issued a statement through the government’s health care reform blog, focusing on commonalities between previous assessments from the Congressional Budget Office and this report, as well as benefits to Medicare recipients.
"The analysis by the independent Office of the Actuary reaffirms what the Congressional Budget Office has already said: the Affordable Care Act will cover more Americans and strengthen Medicare by cracking down on waste, fraud, and abuse, modernizing payment systems and improving benefits by providing free preventive services, supporting innovations that help control chronic disease, and closing the prescription drug donut hole," the blog states. "The Actuaries also find that under the new law, the life of the Medicare trust fund is extended by 12 years while reducing annual Medicare premiums by nearly $200 per senior in the coming years."