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Obamacare working as planned; 'Uninsured rate' will drop to 23 million by 2023

President Barack Obama could easily borrow a line from the former television series, the A-Team, in which the show ends with the famous catchphrase from the show: "I love it when a plan comes together." Obama could easily be talking about the Affordable Care Act in using that old quote. The number of uninsured Americans is expected to decline by nearly half from 45 million in 2012 to 23 million by 2023 as a result of the coverage expansions associated with the Affordable Care Act (ACA), according to a new report released today.

Norma Licciardello sits with an agent from Sunshine Life and Health Advisors as they wait for the Affordable Care Act website to come back on line as she tries to purchases a health insurance plan at a store setup in Mall of Americas on March 31, 2014.
Photo by Joe Raedle/Getty Images

“Health care costs are increasing at a slower rate thanks to the Affordable Care Act,” said Marilyn Tavenner, CMS administrator. “The dramatic decrease in the number of uninsured Americans is a win for our country and its economy in the future.”

The number might even be lower had more states opted into the Medicaid cash expansion. The White House Examiner contacted an Economist from the Centers for Medicare & Medicaid Services (CMS) and asked if the report had taken into account the 23 states that have opted out of the Medicaid cash expansion?

"Our projections reflect a nationally-based percentage of potentially newly eligible enrollees. The assumptions underlying these projections are that 45 percent of the potentially eligible live in states that expand and enroll in Medicaid in 2014, with the percentage increasing to 55 percent 2015 and 65 percent in 2016 and after," said the CMS Economist.

"As far as future states that may or may not expand their programs, we can’t speculate on how this might impact our current projections of spending or the number of uninsured people, though we do and will take into account new information/developments as we prepare future projections," added the CMS Economist.

In addition to the sharp drop in uninsured, new estimates released today from the Office of the Actuary at the Centers for Medicare and Medicaid Services project a slow 3.6 percent rate of health spending growth for 2013 but also project a 5.6 percent increase in health spending for 2014 and an average 6.0 percent increase for 2015-23. The average rate of projected growth for 2013-23 is 5.7 percent, exceeding the expected average growth in gross domestic product (GDP) by 1.1 percentage points.

Increased insurance coverage via the Affordable Care Act (ACA), projected economic growth, and population aging will be the main contributors of this growth, ultimately leading to an expected 19.3 percent health share of nominal GDP in 2023, up from 17.2 percent in 2012. This compares to the Office of the Actuary's 2013 report, previously published in Health Affairs, predicting an average growth rate of 5.8 percent for 2012-22.

"Analysis of historical trends tells us that health care spending tracks with economic growth, so as the economy is anticipated to improve over the next decade, health spending growth is projected to grow faster," says Andrea Sisko, the lead author for the study. "This, in addition to the baby boomers aging and increased insurance coverage mandated by ACA, is expected to result in the health share of GDP rising to nearly one-fifth of the nation's economy by 2023."

Projections for the 2013-23 time period take into account a combination of factors affecting health care spending, including national economic forecasts and demographic trends. The authors noted that the estimates in this report do not presume that the scheduled Medicare physician payment rates under the Sustainable Growth Rate formula, including the approximately 21 percent cut scheduled for April 1, 2015, are undertaken.

Health spending growth in 2013 is anticipated to have increased by 3.6 percent. Projected health spending growth in 2014 is 5.6 percent, a rate closer to the estimated average rate for the time period studied. As a result of the coverage expansions, Medicaid spending is expected to increase 12.8 percent and private insurance spending is expected to increase by 6.8 percent.

Despite continued enrollment through the coverage expansions, health spending growth in 2015 is projected at 4.9 percent, slower than the rate of increase projected for 2014. The 2015 overall projected rate is influenced by planned payment reductions in Medicare Advantage plans. As a result, Medicare expenditure growth is projected to slow by 1.5 percentage points in 2015 to 2.7 percent.

During the remainder of the projection period of 2016-23, health care spending is expected to grow 6.1 percent per year, which is faster than the 4.7 percent average growth projected for 2013–15. One major factor, according to the report, is faster increases in both disposable personal income and private health insurance enrollment, which are projected to occur because of improved economic conditions: GDP growth is projected to be 5.3 percent in 2018.

Consistent with the historical relationship between health spending and economic cycles, these projected changes in the economy are expected to influence health expenditure growth with a lag, which will contribute to a projected peak in the health spending growth rate of 6.6 percent in 2020.

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