Projected Health Spending Has Fallen Since 2010, Even With Health Reform’s Coverage Expansions

January 28, 2015 at 11:20 am

The Congressional Budget Office (CBO) now projects that federal health spending — including the costs of health reform’s coverage expansions — will be about $600 billion less over 2011-2020 than CBO projected in January 2010 without health reform (see figure).

In other words, projected health spending over the decade has fallen by $600 billion since 2010, despite $1 trillion in additional spending for premium tax credits and expanded Medicaid to help cover 27 million more Americans.

The decline in projected spending, which continues a pattern of downward revisions to CBO’s projections in recent years, stems from several factors.  One is health reform’s cuts in payments to Medicare providers and health plans.  Another is the recession, which has reduced the demand for health care services by slowing income growth.

But CBO and other experts have also concluded that a substantial part of the health care cost slowdown reflects structural changes in the health care system.  Professional associations, hospitals, and doctors are taking steps to curb costly and ineffective procedures and treatments.

CBO’s new report says, “Although views differ on how much of the slowdown is attributable to the recession and its aftermath and how much to other factors, the slower growth has been sufficiently broad and persistent to persuade [CBO and the Joint Committee on Taxation] to significantly lower their projections of federal health care spending.”

Health reform itself has most likely contributed to the slowdown as well.  As Kaiser Family Foundation President Drew Altman has written, “Even though its direct effects on system-wide costs may be limited so far, I believe Obamacare is having a significant indirect effect, although cause and effect and the magnitude are hard to prove. . . .  [It] is entirely likely that Obamacare has played and will continue to play a role in the slowdown in health-care cost growth and accelerating market change.”

To be sure, federal health spending — even if cost growth remains moderate — will keep rising as more baby boomers become eligible for Medicare and Medicaid.  Making the U.S. health care system more efficient thus remains a major budget challenge.  But CBO’s latest projections show that we’ve already made substantial progress.

Working-Family Tax Credit Essentials, Part 5: The Impact in Your State

January 27, 2015 at 4:08 pm

Previous posts in this series on our new chart book have explained that the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC):

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Ending Subsidies in Marketplace States Would Hurt Diverse Group

January 26, 2015 at 1:31 pm

I recently cited studies from the Urban Institute and RAND Corporation showing that millions more Americans would be uninsured and premiums would rise significantly if the Supreme Court overturns health reform subsidies for people getting coverage through the federal marketplace.  A follow-up Urban report tells us more about the 8.2 million people estimated to lose coverage.  Of those losing subsidies and becoming uninsured:

  • 81 percent are full- or part-time workers;
  • 62 percent live in the South;
  • 61 percent are white, non-Hispanic; and
  • 60 percent have incomes below twice the poverty line.
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In Case You Missed It . . .

January 23, 2015 at 3:40 pm

This week on Off the Charts, we focused on health reform and the federal budget and taxes.

  • On health reform, Jesse Cross-Call reported that Medicaid eligibility for low-income adults remains extremely limited in states that haven’t adopted health reform’s Medicaid expansion. Matt Broaddus highlighted a study showing that people eligible for Medicaid as children earn more, and pay more in taxes, as adults.  Sarah Lueck noted that fewer people skipped needed health care because of its cost or reported trouble paying medical bills in 2014, when health reform’s major coverage expansions took effect.
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Working-Family Tax Credit Essentials, Part 4: Bipartisan Support for Helping Childless Workers

January 23, 2015 at 2:05 pm

Today’s post on our chart book on the pro-work Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) focuses on the most glaring hole in the EITC: it largely excludes childless adults and non-custodial parents.  President Obama and House Ways and Means Chairman Paul Ryan (R-WI) have advanced important proposals to address this problem, and, as Chairman Ryan said this week, his proposal “basically mirrors the president’s proposal.”  Senators Sherrod Brown (D-OH), Richard Durbin (D-IL), Patty Murray (D-WA), and Jack Reed (D-RI) and Reps.… Read more

Obama’s Education Tax Proposals Would Help Middle-Class Families, Not Hurt Them as Opponents Inaccurately Claim

January 22, 2015 at 5:29 pm

Some critics claim that President Obama’s proposal to streamline and better target tax credits for higher education represents an attack on middle-class families, particularly because of the limits it would impose on so-called “529” accounts.  That’s backward:  the plan overall would do more to help both middle-class and lower-income families afford college.

The President’s plan would scale back tax benefits that disproportionately benefit high-income filers and redirect them toward low- and middle-income students — the people who most need help affording college.  … Read more

FAQs on Budget “Reconciliation”

January 22, 2015 at 2:59 pm

Republican leaders plan to use a legislative process called “reconciliation,” which allows for special and speedy congressional consideration of certain tax and spending bills, to advance their fiscal policy agenda in 2015.  In the Senate, members can’t filibuster reconciliation bills, and the scope of amendments they can offer to them is limited, giving this process real advantages for enacting controversial budget and tax measures.  Our new report addresses some frequently asked questions about reconciliation:

  • How Often Have Policymakers Used Reconciliation?
  • What Kinds of Changes Can a Reconciliation Bill Include?
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Medicaid Eligibility for Low-Income Adults Lags Badly in Non-Expansion States

January 22, 2015 at 12:51 pm

The 23 states that haven’t expanded Medicaid as part of health reform have very limited Medicaid eligibility for non-elderly low-income adults, the latest annual survey of state health program officials from Georgetown University’s Center for Children and Families and the Kaiser Family Foundation finds.  That’s a key reason why 4 million uninsured adults remain in a “coverage gap” in non-expansion states, with incomes too high for Medicaid but loo low for subsidies to buy coverage through health reform’s marketplace.

By and large, non-expansion states have kept Medicaid eligibility for low-income adults at the very low income levels in place before health reform took effect. … Read more

Working-Family Tax Credit Essentials, Part 3: Making Key Provisions Permanent

January 21, 2015 at 1:14 pm

Our last post on our new chart book highlighted ground-breaking research suggesting that the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) help families at virtually every stage of life.  Today, we’ll explain why making several key CTC and EITC provisions permanent should be a top priority for Congress.

In 2009, policymakers lowered the earnings needed to qualify for a partial CTC, thereby expanding the credit for millions of low-income working families and making other families newly eligible for a partial credit. … Read more

Medicaid-Eligible Children Grow Up to Earn More and Pay More in Taxes

January 21, 2015 at 12:01 pm

People eligible for Medicaid in childhood earn more as adults, and thus contribute more in federal taxes, than other low-income people who weren’t eligible, a recent promising study published by the National Bureau of Economic Research (NBER) finds.  And those benefits, which help offset the cost of providing Medicaid coverage, grow with each year of eligibility.

These findings are the most recent evidence of Medicaid’s wide-ranging benefits to the nation as well as enrollees.  Nearly 30 million Medicaid enrollees — half of all people with Medicaid coverage — are age 18 or under.… Read more

Fewer People Having Trouble Paying Medical Bills

January 20, 2015 at 3:55 pm

Fewer people skipped needed health care due to its cost or reported trouble paying medical bills in 2014, a new survey finds.  These improvements, the first since the Commonwealth Fund began asking these questions roughly a decade ago, came as health reform’s major coverage expansions took effect in 2014.

Among the survey’s findings:

  • The number of people ages 19-64 without health insurance showed a statistically significant drop for the first time in the history of the biennial survey, from 36 million in 2012 to 29 million in 2014.
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Examining the President’s New Tax Proposals

January 20, 2015 at 3:09 pm

We’ve issued two pieces on the President’s new proposals, which he’ll discuss in tonight’s State of the Union address, to reduce the tax code’s tilt toward capital gains and use the new revenues to support work and help working families build skills and savings.

  • Robert Greenstein’s statement:

    In recent decades, economic growth has powerfully benefitted Wall Street, while leaving much of Main Street behind.  The plan that President Obama unveiled today would take large, important steps to help redress part of the imbalance and make prosperity more broadly shared.  The President’s new tax proposals will surely elicit howls of protest from various special interests and on ideological grounds; adversaries will make predictable claims that the proposals would harm the economy and jobs.  Yet while the proposals do present a major challenge to the status quo, they should benefit economic growth, not hinder it, while substantially helping tens of millions of middle- and lower-income working families and individuals.

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