Another Perspective on the Actuary's Report on Health Reform

Yesterday, the Center for Medicare and Medicaid Services (CMS) Office of the Actuary released its analysis of the Affordable Care Act. The analysis was requested by Congressional Republicans and is largely similar to previous analyses done by the Actuary. This report examines features in the new law that will help strengthen our health care system and found that under reform, Medicare will be stronger, with premiums decreasing by nearly $200 per person per year by 2018 and that the life of the Medicare Trust fund is extended by an additional 12 years. The Actuary also noted that an additional 34 million Americans will gain health insurance by 2019.

But there are some areas where we disagree with the Actuary, particularly when it comes to the new law and the growth of health care costs.  Even the Actuary states that its predictions aren’t set in stone, and notes that the estimates are “subject to much greater uncertainty than normal.” And as a former CMS Administrator, I helped implement the Balanced Budget Act and saw how both the Office of the Actuary and the Congressional Budget Office substantially underestimated the savings that were achieved. 

Most importantly, the analysis discounts proposals that other independent experts credit with getting at the root causes of health care cost growth.  The Affordable Care Act, for example:

  • Creates a health insurance exchange that will demand accountability from insurers and set up a competition choice system that would pressure insurers to lower premiums.
  • Establishes ways for Medicare to adopt cutting-edge payment reforms, such as the new Innovation Center that will transform Medicare payment policies, whose benefits will spill over to the private sector.
  • Creates Accountable Care Organizations and other ways to promote value – so that beneficiaries are getting better care not just expensive care. The plan gives health care providers incentives to coordinate care to improve the quality of care as well as efficiency.

Health policy experts and economists who have studied the bill have agreed that the new law will help bring down health care costs, and that it utilizes almost all the possible tools to reduce health care costs. In fact, a broad coalition of economists wrote to President Obama and Congress calling for reform, precisely because it will help bring down health care costs.

The analysis also raises questions about whether reform will lead to a shortage of doctors and hospitals for Medicare patients. But contrary to the Actuary’s speculation, there is no evidence that providers would not continue to serve Medicare patients, and the report ignores key provisions that will strengthen our health care workforce. And when the Actuary raised similar concerns months ago, hospital leaders reaffirmed  their commitment to serving America’s seniors.  Moreover, organizations like the American Hospital Association and American Medical Association supported reform and would have been unlikely to back the law if they believed it would hurt their own viability. 

Now, the President and his administration are fully focused on the next challenge: making sure the law is implemented quickly and effectively. As we continue this important work, we will be answering your questions about the new law. Yesterday, leaders from AARP and the Department of Health and Human Services took your questions in a live town hall and we’ll continue to providing important information about the benefits of reform for all Americans.

Nancy-Ann DeParle is Director of the White House Office of Health Reform

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