The Widespread Slowdown
in Health Spending Growth
Implications for Future
Spending Projections and the
Cost of the Affordable Care Act
An Update
ACA Implementation—Monitoring and Tracking
June 2016
Stacey McMorrow and John Holahan
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ACA Implemention-Monitoring and Tracking
INTRODUCTION
In April 2015, we published a report that analyzed the
widespread slowdown in health care spending growth
leading up to 2014 and the implications for national health
expenditure projections and the cost of the Affordable
Care Act (ACA).1 We examined six consecutive Centers for
Medicare and Medicaid Services (CMS) forecasts of national
health expenditures, focusing on the pre-ACA forecast
made in February 2010, the ACA baseline forecast made
in September 2010, and the 2014 forecast.2 In 2010, CMS
estimated that national health expenditures for the years
2014 to 2019 would increase by $577 billion under the ACA.
This reflected the increased costs of coverage expansion
offset by reductions in Medicare and Medicaid payments.
Over the next four years, however, CMS repeatedly
reduced its annual forecasts of 2014 to 2019 expenditures.
Ultimately, the 2014 forecast suggested that national health
expenditures for 2014 to 2019 would be about $2.5 trillion
less than the ACA baseline forecast from September 2010.
Projections were lower overall and for Medicare, Medicaid,
and private health insurance, with some of the reductions
explained by policy changes over time, such as the 2012
Supreme Court decision on Medicaid expansion and the
Budget Control Act of 2011 (i.e., sequestration).
A critical factor in the reduced spending projections
over time, however, was the historic slowdown in health
spending growth that began in 2008. At the time of the
2014 forecast, the average annual growth rate from 2010
to 2013 was about 3.6 percent compared with the 5.4
percent that had been projected in 2010. This slower
growth clearly lowered the level of spending on which
later forecasts were based and therefore contributed to
reduced spending projections for 2014 to 2019. Unclear,
however, is how much slower growth leading up to 2014
informed assumptions about the projected future rate of
growth. Although the CMS actuaries did acknowledge
the proliferation of high-deductible private health plans
and cost-containment efforts in state Medicaid programs
as contributors, they mainly attributed the slowdown to
the Great Recession and sluggish economic recovery.
Consequently, those actuaries assumed that a robust
recovery would ultimately lead to returns to higher growth
rates in the later years of the forecast.
In our earlier report, we discussed several factors beyond
the recession, including several ACA provisions, that may
have contributed to the health spending slowdown. We also
suggested that if these other factors kept spending growth
low following economic recovery, then CMS spending
projections may continue to fall. Since that report, CMS
has released another round of national health spending
projections for 2014 to 2024, and additional estimates of
health spending growth in 2014 and 2015 have become
available through CMS and the Altarum Institute. This brief
uses the CMS projections released in July 2015 to update
our previous analysis and considers the implications of other
recent data for interpreting future spending projections.
With support from the Robert Wood Johnson Foundation (RWJF), the Urban Institute
is undertaking a comprehensive monitoring and tracking project to examine the
implementation and effects of the Patient Protection and Affordable Care Act of 2010
(ACA). The project began in May 2011 and will take place over several years. The Urban
Institute will document changes to the implementation of national health reform to help
states, researchers and policymakers learn from the process as it unfolds. Reports that have
been prepared as part of this ongoing project can be found at www.rwjf.org and
www.healthpolicycenter.org. The quantitative component of the project is producing
analyses of the effects of the ACA on coverage, health expenditures, affordability, access
and premiums in the states and nationally.
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ACA Implemention-Monitoring and Tracking
Table 1. Cumulative Spending Projections for 2014 to 2019
Original 2014 forecast
(2014–2019) relative to
original ACA baseline
Adjusted 2014 forecast
(2014–2019) relative to
adjusted ACA baseline
2015 forecast
(2014–2019) relative to
adjusted 2014 forecast
2015 forecast
(2014–2019) relative to
adjusted ACA baseline
$
% change
$
% change
$
% change
$
% change
NHE
-2538
-10.8%
-2672
-11.3%
49
0.2%
-2623
-11.0%
Medicare
-384
-8.4%
-518
-10.9%
63
1.5%
-455
-9.6%
Medicaid
-927
-20.3%
-927
-20.3%
-123
-3.4%
-1050
-23.0%
Private
-688
-8.9%
-688
-8.9%
24
0.3%
-664
-8.6%
OOP
-20
-0.9%
-20
-0.9%
22
1.0%
2
0.1%
Other
-519
-11.5%
-519
-11.5%
63
1.6%
-456
-10.1%
Source: Authors’ analysis of Centers for Medicare and Medicaid Services national health expenditure projections.
Table Notes: OOP = out-of-pocket. NHE = national health expenditures. Dollar estimates in billions. Original 2014 forecast and ACA baseline included the projected
effects of required cuts to physician payment rates under the sustainable growth rate system. Adjusted forecasts reflect alternative scenarios that assume the cuts to physician
payments under the sustainable growth rate system will be replaced with rate freezes or small increases.
DATA & METHODS
This paper compares the most recent CMS forecast released
in July 2015 to the 2010 ACA baseline forecast. The 2015
forecast incorporates actual spending data from 2013 and
projects spending for 2014 through 2024.3 Importantly,
the 2015 forecast also incorporates the Medicare Access
and CHIP Reauthorization Act (MACRA), passed in April
2015, that permanently eliminated the sustainable growth
rate (SGR) system for setting physician payment rates in
Medicare.4 Our earlier work used the “current-law” forecasts
for Medicare spending, which included the projected effects
of large cuts to Medicare physician payments that were
required by the SGR system at the time of each forecast.
To be consistent with the new law reflected in the 2015
forecast, we have adjusted the ACA baseline Medicare
forecast to assume that the cuts to physician payments
under the SGR system would be replaced with a rate freeze.5
We made a similar adjustment to the 2014 forecast used in
our earlier report, and these adjustments change two main
findings from that report.6 First, when comparing the adjusted
2014 forecast to the adjusted ACA baseline forecast, we now
find a decline in projected Medicare spending for 2014 to
2019 of $518 billion compared with our earlier finding of $384
billion (table 1).7 Second, this additional $134 billion decline
in Medicare spending is directly reflected in the additional
decline in total national health expenditures for 2014 to 2019
when comparing the adjusted forecasts (-$2,672 billion)
versus the original forecasts (-$2,538 billion). For simplicity,
we omit “adjusted” from future references to the forecasts,
but all estimates hereafter use the adjusted forecasts
that assume SGR-related cuts to physician payments are
replaced with rate freezes or modest increases.
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ACA Implemention-Monitoring and Tracking
Figure 1. National Health Expenditure Projects ($ billions)
2000
4500
4750
4250
4000
2500
2750
3500
3250
3000
2750
2250
2010
2011
2012
2013
2019
2018
2017
2016
2015
2014
3080
3247
3326
4020
4534
4614
Cumulative 2014-2019 Spending
2010 adjusted pre-ACA forecast:
$23.2 trillion
2010 adjusted ACA baseline forecast: $23.7 trillion
2015 forecast:
$21.1 trillion
Difference (2015 - ACA baseline):
-$2.6 trillion
Source: Authors’ analysis of Centers for Medicare and Medicaid Services national health expenditure projections. Adjusted forecasts reflect alternative scenarios that assume the
cuts to physician payments under the sustainable growth rate system are replaced with a rate freeze. 2015 forecast reflects permanent fix under the Medicare Access and CHIP
Reauthorization Act (MACRA) of 2015.
RESULTS
On the whole, cumulative 2014 to 2019 national health
spending in the 2015 forecast is $49 billion higher than in
the 2014 forecast (table 1). The 2015 forecasts for Medicare,
private health insurance, out-of–pocket spending, and other
health spending are also slightly higher for the 2014 to 2019
period than in the 2014 forecast. Medicaid spending for
2014 to 2019, however, is now projected to be $123 billion
lower than in the 2014 forecast. Despite the modest increase
in projected national health spending since the 2014
forecast, however, the 2015 forecast still reflects a decline of
$2.6 trillion from 2014 to 2019 compared with the 2010 ACA
baseline forecast (figure 1). In the sections that follow, we
compare the 2015 forecast to the ACA baseline forecast for
each major component of national health spending.
Medicare
Medicare spending was reduced in the 2010 ACA baseline
forecast compared with the pre-ACA forecast because
of reductions in payments to Medicare Advantage plans
and the reductions in annual payment updates for most
institutional providers (figure 2). By 2015, the CMS actuaries
predicted that total Medicare spending for 2014 to 2019
would be $455 billion lower than in the ACA baseline
forecast. One reason is the Budget Control Act of 2011
(i.e., sequestration), which required Medicare payments for
all types of services be reduced 2 percent beginning in April
2013; another reason is the slower-than-expected spending
growth between 2010 and 2014. CMS currently assumes
spending growth would increase to an average annual
rate of 6.3 percent from 2014 to 2019 compared with 4.4
percent from 2010 to 2014 (table 2). This faster growth from
2014 to 2019 is driven by spending per enrollee, which is
expected to grow at an average annual rate of 3.1 percent
for 2014 to 2019 compared with 1.3 percent for 2010 to
2014 while projected enrollment growth remains stable.
Medicaid
Medicaid spending under the 2010 ACA baseline forecast
was higher than the pre-ACA forecast because of the
eligibility expansion (figure 3). Compared with the ACA
2010 pre-ACA forecast
2010 ACA baseline forecast
2015 forecast
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ACA Implemention-Monitoring and Tracking
Table 2. Medicare Spending, Enrollment and Spending per Enrollee
Projections, 2014 to 2019
2010
2014
2019
2010–2014
2014–2019
Medicare spending
$ billions
Cumulative spending
Adjusted ACA baseline
537
679
934
3,025
4,744
Average annual growth rate
6.0%
6.6%
2015 forecast
520
617
838
2,834
4,290
Average annual growth rate
4.4%
6.3%
Medicare enrollment
millions
Average enrollment
ACA baseline
46.8
52.4
60.5
49
56
Average annual growth rate
2.9%
2.9%
2015 forecast
46.6
52.6
61.2
50
57
Average annual growth rate
3.1%
3.1%
Medicare spending per enrollee
$
Average spending per enrollee
Adjusted ACA baseline
11,479
12,961
15,440
12,211
13,990
Average annual growth rate
3.1%
3.6%
2015 forecast
11,157
11,726
13,686
11,424
12,527
Average annual growth rate
1.3%
3.1%
Source: Authors’ analysis of CMS national health expenditure projections.
Table Notes: Adjusted forecasts reflect alternative scenarios that assume the cuts to physician payments under the sustainable growth rate system are replaced with rate freezes or small increases. 2015
forecast reflects permanent fix under the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015.
Figure 2. Medicare Expenditure Projections ($ billions)
250
750
1,000
500
2010
2011
2012
2013
2019
2018
2017
2016
2015
2014
694
679
617
934
838
1029
Cumulative 2014-2019 Spending
2010 adjusted pre-ACA forecast:
$5,087 billion
2010 adjusted ACA baseline forecast: $4,744 billion
2015 forecast:
$4,290 billion
Difference (2015 - ACA baseline):
-$455 billion
Source: Authors’ analysis of Centers for Medicare and Medicaid Services national health expenditure projections. Adjusted forecasts reflect alternative scenarios that assume the
cuts to physician payments under the sustainable growth rate system are replaced with a rate freeze. 2015 forecast reflects permanent fix under the Medicare Access and CHIP
Reauthorization Act (MACRA) of 2015.
2010 pre-ACA forecast
2010 ACA baseline forecast
2015 forecast
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ACA Implemention-Monitoring and Tracking
Figure 3. Medicaid Expenditure Projections ($ billions)
250
750
1,000
500
2010
2011
2012
2013
2019
2018
2017
2016
2015
2014
634
552
503
794
669
896
Cumulative 2014-2019 Spending
2010 pre-ACA forecast:
$4,003 billion
2010 ACA baseline forecast:
$4,567 billion
2015 forecast:
$3,517 billion
Difference (2015 - ACA baseline):
-$1,050 billion
Source: Authors’ analysis of Centers for Medicare and Medicaid Services national health expenditure projections.
baseline forecast, projected Medicaid spending for 2014 to
2019 fell by $1,050 billion in the 2015 forecast. This was
partly because of the Supreme Court decision in 2012 that
made the ACA Medicaid expansion optional for states and
significantly reduced enrollment projections. For example,
the ACA baseline forecast predicted 2014 Medicaid
enrollment of 78.8 million enrollees, but this fell to 66.5
million enrollees in the 2015 forecast after accounting for the
Supreme Court decision (table 3). Projected average annual
growth in spending per enrollee for 2014 to 2019 also fell
between the ACA baseline forecast and the 2015 forecast,
from 6.8 percent to 3.3 percent.
Private Health Insurance
Like Medicaid spending, private health insurance spending
projections were higher in the 2010 ACA baseline forecast
than in the pre-ACA forecast mainly because of the
marketplace expansion (figure 4). But private spending
projections for 2014 to 2019 were lower in the 2015
forecast by $664 billion than in the ACA baseline forecast.
Much of this decline was driven by slower spending
growth between 2010 and 2014 than had been expected
in 2010. Contributors to slower growth likely included
the sluggish economic recovery as well as lower-than-
expected prescription drug spending because of patent
expirations and increases in generic drug prescribing.
Another likely contributor was a substantial shift toward
higher deductibles and cost sharing in private plans, some
of which may have been adopted in anticipation of the
ACA excise tax on high-cost plans. The average annual
growth rate for 2014 to 2019 is currently projected to be
5.4 percent, which is somewhat faster than estimated
growth from 2010 to 2014 of 4.3 percent. This uptick in
spending growth in the later period is driven primarily by
higher projected enrollment growth (table 4).
2010 pre-ACA forecast
2010 ACA baseline forecast
2015 forecast
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ACA Implemention-Monitoring and Tracking
Figure 4. Private Health Insurance Expenditure Projections ($ billions)
750
1,250
1,500
1,000
2010
2011
2012
2013
2019
2018
2017
2016
2015
2014
1065
1020
1005
1361
1329
1467
Cumulative 2014-2019 Spending
2010 pre-ACA forecast:
$7,102 billion
2010 ACA baseline forecast:
$7,694 billion
2015 forecast:
$7,030 billion
Difference (2015 - ACA baseline):
-$664 billion
Source: Authors’ analysis of Centers for Medicare and Medicaid Services national health expenditure projections.
Table 3. Medicaid Spending, Enrollment and Spending per Enrollee
Projections, 2014 to 2019
2010
2014
2019
2010–2014
2014–2019
Medicaid spending
$ billions
Cumulative spending
ACA baseline
427
634
896
2,569
4,567
Average annual growth rate
10.4%
7.2%
2015 forecast
398
503
669
2,182
3,517
Average annual growth rate
6.1%
5.9%
Medicaid enrollment
millions
Average enrollment
ACA baseline
54.9
78.8
80.2
61
79
Average annual growth rate
9.5%
0.4%
2015 forecast
54.3
66.5
75.3
59
72
Average annual growth rate
5.2%
2.5%
Medicaid spending per enrollee
$
Average spending per enrollee
ACA baseline
7,783
8,047
11,175
8,491
9,647
Average annual growth rate
0.8%
6.8%
2015 forecast
7,322
7,568
8,888
7,413
8,111
Average annual growth rate
0.8%
3.3%
Source: Authors’ analysis of Centers for Medicare and Medicaid Services national health expenditure projections.
2010 pre-ACA forecast
2010 ACA baseline forecast
2015 forecast
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ACA Implemention-Monitoring and Tracking
2010
2014
2019
2010–2014
2014–2019
Private health insurance spending
$ billions
Cumulative spending
ACA baseline
845
1,065
1,467
4,613
7,694
Average annual growth rate
6.0%
6.6%
2015 forecast
862
1,020
1,329
4,679
7,030
Average annual growth rate
4.3%
5.4%
Private health insurance enrollment
millions
Average enrollment
ACA baseline
189.2
198.1
207.1
191
204
Average annual growth rate
1.2%
0.9%
2015 forecast
186.3
190.6
204.1
188
199
Average annual growth rate
0.6%
1.4%
Private spending per enrollee
$
Average spending per enrollee
ACA baseline
4,466
5,375
7,085
4,832
6,285
Average annual growth rate
4.7%
5.7%
2015 forecast
4,628
5,353
6,512
4,968
5,873
Average annual growth rate
3.7%
4.0%
Source: Authors’ analysis of Centers for Medicare and Medicaid Services national health expenditure projections.
Table 4. Private Health Insurance Spending, Enrollment and Spending
per Enrollee Projections, 2014 to 2019
Out-of-Pocket Spending and Other
Health Spending
In the 2010 ACA baseline forecast, the CMS actuaries
predicted a significant reduction in out-of-pocket
expenditures caused by the ACA coverage expansions
(figure 5). Subsequent forecasts have varied slightly, most
notably because of reductions in the projected effects
of the ACA excise tax on high-cost plans. But by 2015,
projected out-of-pocket spending for 2014 to 2019 was
just $2 billion more than in the 2010 ACA baseline forecast.
Finally, CMS estimates a residual category of “other health
spending” that includes spending on the Children’s Health
Insurance Program, the US Department of Defense and
US Department of Veterans Affairs health programs, public
health activity, and investments such as new construction
and capital equipment. The 2010 ACA baseline forecast
projected a small decline in other spending under the ACA
(figure 6). By 2015, however, projected spending in the other
category fell by $456 billion for 2014 to 2019 compared with
the ACA baseline forecast. Most of the reduction was driven
by declines in investment spending, perhaps related to the
slow economic recovery and anticipation of less demand for
new construction and medical devices because of payment
constraints in the ACA.
Congressional Budget Office (CBO)
Projections of Federal Spending
Although CMS projects health expenditures by all payers,
CBO makes independent projections of ACA-related federal
spending as well as federal spending on Medicare and
Medicaid (table 5). In 2010, after the passage of the ACA,
CBO estimated that exchange subsidies would amount to
$464 billion from 2014 to 2019. In its most recent forecast,
CBO projects $313 billion, a reduction of 32.5 percent. In its
2010 forecast, CBO projected federal Medicaid and CHIP
outlays for the expansion population would be $434 billion
from 2014 to 2019 compared with $366 billion in its current
forecast, a reduction of 15.7 percent. Small-employer tax
credits are also 85 percent smaller than originally projected
because of limited use. Consequently, CBO’s projected
gross cost of all ACA coverage provisions for 2014 to 2019
has fallen from $938 billion in the 2010 forecast to $686
billion in the 2015 forecast, a reduction of 26.9 percent.
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ACA Implemention-Monitoring and Tracking
Figure 6. Other Health Expenditure Projections ($ billions)
250
700
1,000
550
850
400
2010
2011
2012
2013
2019
2018
2017
2016
2015
2014
648
626
596
878
770
884
Cumulative 2014-2019 Spending
2010 pre-ACA forecast:
$4,567 billion
2010 ACA baseline forecast:
$4,449 billion
2015 forecast:
$4,043 billion
Difference (2015 - ACA baseline):
-$456 billion
Source: Authors’ analysis of Centers for Medicare and Medicaid Services national health expenditure projections.
2010 pre-ACA forecast
2010 ACA baseline forecast
2015 forecast
Figure 5. Out-of-Pocket Expenditure Projections ($ billions)
250
400
500
350
450
300
2010
2011
2012
2013
2019
2018
2017
2016
2015
2014
348
344
322
439
415
466
Cumulative 2014-2019 Spending
2010 pre-ACA forecast:
$2,438 billion
2010 ACA baseline forecast:
$2,237 billion
2015 forecast:
$2,239 billion
Difference (2015 - ACA baseline):
$2 billion
Source: Authors’ analysis of Centers for Medicare and Medicaid Services national health expenditure projections.
2010 pre-ACA forecast
2010 ACA baseline forecast
2015 forecast
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ACA Implemention-Monitoring and Tracking
Cumulative Federal Spending 2014-2019
2010 ACA baseline
2016 forecast
2016 forecast relative to ACA baseline
$ billions
$ billions
Difference
% Change
ACA insurance coverage provisions
Medicaid and CHIP outlays
434
366
-68
-15.7%
Exchange subsidies and related spending
464
313
-151
-32.5%
Small-employer tax credits
40
6
-34
-85.0%
Gross cost of provisions
938
686
-252
-26.9%
Medicare
Gross outlays
4,713
4,185
-528
-11.2%
Net outlays
4,044
3,527
-517
-12.8%
Medicaid
Total federal outlays, excluding ACA expansion
population
2,188
1,901
-287
-13.1%
Total gross outlays
7,170
6,114
-1,056
-14.7%
Source: Authors’ analysis of Congressional Budget Office federal spending projections.
Table Notes: In order to compare like budget windows, the 2016 forecast incorporates historical data from previous years projections. The Medicare and Medicaid projections are from their respective
2015 and 2016 baselines. The ACA insurance coverage provision projections are from 2014, 2015, and 2016 since no historical data is included.
Table 5. Congressional Budget Office Projections, 2014 to 2019
CBO also currently forecasts a reduction of $528 billion
in Medicare mandatory outlays from 2014 to 2019,
or 11.2 percent relative to their 2010 forecast. Finally,
federal Medicaid outlays for 2014 to 2019 for those not
newly eligible under the ACA Medicaid expansion are
now projected to be $287 billion lower than in their 2010
forecast, a reduction of 13.1 percent. Thus, although
we cannot compare CBO’s specific estimates to those
produced by CMS because of differences in the spending
categories and other methodological inconsistencies, the
patterns generally parallel those in the CMS forecasts over
time. That is, current CBO projections are far below those
made when the ACA was enacted in 2010. Altogether,
federal spending for Medicare, Medicaid, and ACA coverage
provisions for 2014 to 2019 are now projected to be $1.1
trillion, or 14.7 percent, below CBO’s 2010 ACA forecasts.
CONCLUSIONS
Relative to the 2014 forecast, the 2015 CMS forecast
includes a relatively modest increase in projected national
health spending for 2014 to 2019 of $49 billion. Despite this
increase, comparing the 2015 forecast to the 2010 ACA
baseline forecast still reveals dramatic declines in spending
projections for 2014 to 2019. National health spending is
projected to be $2.6 trillion lower than in the 2010 ACA
baseline forecast for the same period. Declines in projected
2014 to 2019 spending on Medicare ($455 billion), Medicaid
($1050 billion), private health insurance ($664 billion) and
other health spending ($456 billion) since the 2010 ACA
baseline forecast continue to be quite large as well.
CMS did not attribute any of the reductions in their projections
over time for 2014 to 2019 to the ACA.9 They had of course
incorporated the law’s significant cost containment provisions
in their 2010 ACA baseline forecast. But the ACA could
have contributed to the lower 2015 projections in several
ways. First, the ACA payment adjustments that began in
2011 seemed to have had a greater effect on utilization than
anticipated. Unexpected reductions occurred in Medicare
hospital days, outpatient visits, skilled nursing facility days,
and advanced imaging between 2010 and 2014.10 Second,
lower payment rates in Medicare may have affected payment
rates by other payers, with commercial insurers following
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ACA Implemention-Monitoring and Tracking
Medicare in their negotiations with hospitals and physicians.11
Third, Medicare policies, such as financial penalties for
hospital readmissions, may have spilled over to other payers.
Fourth, premiums in marketplaces are below expectations
because of strong competition, intense negotiations over
provider payment rates, and narrow networks.12
In addition, CMS has thus far not attributed any cost
savings to accountable care organizations, medical
homes, or other delivery system reforms that have been
proliferating over the past several years. But the presence
of such reforms, together with payment reductions in
Medicare and dramatically increased cost sharing in private
plans, may have heightened uncertainty among providers
over the flow of revenues. All of this could have caused
providers to make substantial structural changes to adapt
to the new environment.
If the ACA and other factors discussed above have
contributed to slower spending growth in unmeasured ways,
then slower growth may persist beyond current projections.13
But if the economy was the primary driver of slower growth,
then we should expect a return to faster growth with a
robust recovery.14 Researchers at the Altarum Institute have
been tracking health spending growth ahead of the official
CMS estimates, and they reported increases in spending
growth throughout 2014, peaking at 6.2 percent in the
fourth quarter; compare this with the average growth of
under 4 percent from 2008 to 2013.15 Some interpreted this
as a sign that the slowdown in health spending growth had
ended, but evidence is growing that this spike was largely
caused by the ACA coverage expansion and has already
begun to dissipate.16
More recent evidence from the Altarum Institute seems
to confirm the temporary nature of the 2014 spike; their
researchers reported that spending growth continued to
increase through the first quarter of 2015, but by the last
quarter of 2015, spending growth had again slowed to
below 5 percent. If this persists, even the current CMS
forecast could prove too high. CMS projects returns to
national health expenditure growth rates of at least 6
percent from 2019 to 2024, but the Altarum Institute’s
estimates seem to support the notion that factors beyond
the economy have contributed to persistently slower
spending growth. If current CMS projections do not fully
reflect this pattern, spending projections will continue to
fall and it will become harder not to attribute at least some
of the sustained cost containment to the ACA.
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ACA Implemention-Monitoring and Tracking
ENDNOTES
1. Holahan J and McMorrow S. The Widespread Slowdown in Health Spending Growth.
Washington: Urban Institute, 2015. http://www.urban.org/research/publication/widespread-
slowdown-health-spending-growth. Accessed May 26, 2016.
2. Centers for Medicare and Medicaid Services. National Health Expenditure Projections
2009–2019, 2010; Truffer CJ, Keehan S, Smith S, Cylus J, Sisko A, Poisal JA, et al. Health
Spending Projections Through 2019: The Recession’s Impact Continues. Health Affairs
2010;29(3):522-29; Centers for Medicare and Medicaid Services. National Health Expenditure
Projections 2009–2019 (September 2010), 2010; Sisko AM, Truffer CJ, Keehan SP, Poisal
JA, Clemens MK, and Madison AJ. National Health Spending Projections: The Estimated
Impact of Reform Through 2019. Health Affairs 2010;29(10):1933-41; Centers for Medicare
and Medicaid Services. National Health Expenditure Projections 2013-2023, 2014; Sisko AM,
Keehan SP, Cuckler GA, Madison AJ, Smith SD, Wolfe CJ, et al. National Health Expenditure
Projections, 2013-23: Faster Growth Expected with Expanded Coverage and Improving
Economy. Health Affairs. 2014;33(10):1-10.
3. Centers for Medicare and Medicaid Services. National Health Expenditure
Projections 2014–2024, July 2015. https://www.cms.gov/Research-Statistics-
Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/
NationalHealthAccountsProjected.html. Updated July 30, 2015.Accessed May 26, 2016;
and Keehan SP, Cuckler GA, Sisko AM, Madison AJ, Smith SD, et al. National Health
Expenditure Projections, 2014-24: Spending Growth Faster Than Recent Trends. Health
Affairs. 2015;34(8):1407–1417.
4.
In practice, the Medicare Access and CHIP Reauthorization Act of 2015 included a
payment rate freeze for the first six months of 2015, a 0.5 percent increase for the rest of that
year, and a 0.5 percent increase for each year from 2016 to 2019.
5. We adjusted both the pre-ACA baseline and ACA baseline forecasts using information
provided by CBO on the increase in Part B spending projections that would occur
assuming a physician payment rate freeze rather than the required SGR cuts
(https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/
dataandtechnicalinformation/health2.pdf and https://www.cbo.gov/sites/default/files/111th-
congress-2009-2010/dataandtechnicalinformation/SGR-Menu.pdf). We calculated this
spending adjustment as a share of Medicare Part B spending in each year using the CBO
forecasts (March 2009 Medicare Baseline https://www.cbo.gov/sites/default/files/51302-
2009-03-Medicare.pdf and August 2010 Baseline https://www.cbo.gov/sites/default/
files/51302-2010-08-Medicare.pdf), and applied the equivalent adjustment to CMS
forecasts of Medicare Part B spending (CMS Projected Medicare Part B Expenditures
under Two Illustrative Scenarios with Alternative Payment Updates, May 12, 2009; and
CMS Projected Medicare Expenditures under an Illustrative Scenario with Alternative
Payment Updates to Medicare Providers, August 5, 2010).
6.
For the 2014 CMS forecast, we used the “projected baseline” provided by CMS,
which used assumptions that were very close to the actual provisions implemented under
the Medicaid Access and CHIP Reauthorization Act of 2015 (CMS Projected Medicare
Expenditures under Current Law, the Projected Baseline and an Illustrative Alternative
Scenario, August 28, 2014, https://www.cms.gov/Research-Statistics-Data-and-Systems/
Statistics-Trends-and-Reports/ReportsTrustFunds/Downloads/2014TRAlternativeScenario.
pdf). In 2014, the alternative scenario assumed a freeze in 2015 and a 0.6 percent increase
for 2016 to 2019. We did not use the CMS illustrative alternative scenarios in earlier years
because they generally assumed more generous physician updates than those that were
actually implemented in later “doc fix” bills.
7.
The additional decline in projected spending reflects the fact that the ACA baseline
forecast assumed the effects of adherence to the sustainable growth rate system over
a longer period, leading to a more substantial underestimate of Medicare spending than
in the 2014 forecast.
8.
To compare like budget windows, we have combined data from several reports to get
the 2016 forecast because those reports do not include historical projections. The Medicare
and Medicaid outlays use the March 2015 baselines combined with the March 2016 to
get the full 2014 to 2019 budget window. The cost of ACA insurance coverage provisions
use three years of baseline projections because no historical data are included. For 2016
estimates, see Congressional Budget Office’s March 2015 Medicare Baseline: By Fiscal
Year. Congressional Budget Office. https://www.cbo.gov/sites/default/files/51302-2015-
03-Medicare.pdf. Accessed May 26, 2016; Congressional Budget Office’s March 2016
Medicare Baseline: By Fiscal Year. Congressional Budget Office. https://www.cbo.gov/sites/
default/files/51302-2016-03-Medicare.pdf. Accessed May 26, 2016; Detail of Spending and
Enrollment for Medicaid—CBO’s March 2015 Baseline (By Fiscal Year). Congressional Budget
Office. https://www.cbo.gov/sites/default/files/51301-2015-03-Medicaid.pdf. Accessed May
26, 2016; Detail of Spending and Enrollment for Medicaid for CBO’s March 2016 Baseline
(By Fiscal Year). Congressional Budget Office. https://www.cbo.gov/sites/default/files/51301-
2016-03-Medicaid.pdf. Accessed May 26, 2016; Federal Subsidies for Health Insurance
Coverage for People under Age 65: Tables From CBO’s March 2016 Baseline. Congressional
Budget Office. https://www.cbo.gov/sites/default/files/51298-2016-03-HealthInsurance.pdf.
Accessed May 26, 2016; Insurance Coverage Provisions of the Affordable Care Act—CBO’s
March 2015 Baseline. Congressional Budget Office. https://www.cbo.gov/sites/default/
files/51298-2015-03-ACA.pdf. Accessed May 26, 2016; Insurance Coverage Provisions of
the Affordable Care Act—CBO’s April 2014 Baseline. Congressional Budget Office.
https://www.cbo.gov/sites/default/files/51298-2014-04-ACA.pdf. Accessed May 26, 2016.
For 2010, see CBO’s August 2010 Baseline: Medicare. Congressional Budget Office.
https://www.cbo.gov/sites/default/files/51302-2010-08-Medicare.pdf. Accessed May 26,
2016; Douglas W. Elmendorf. Congressional Budget Office Letter to Speaker Nancy Pelosi,
March 20, 2010. https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/
costestimate/amendreconprop.pdf. Accessed May 26, 2016; Spending and Enrollment
Detail for CBO’s March 2010 Baseline: Medicaid. Congressional Budget Office.
https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/
dataandtechnicalinformation/MedicaidBaseline.pdf. Accessed May 26, 2016.
9. Centers for Medicare and Medicaid Services. Analysis of Factors Leading to Changes
in Projected 2019 National Health Expenditure Estimates: A Comparison of April 2010 and
September 2013 Projections. Baltimore: Centers for Medicare and Medicaid Services, 2013.
10. White C, Cubanski J, and Neuman T. How Much of the Medicare Spending Slowdown
Can Be Explained? Insights and Analysis from 2014. Menlo Park, CA: Kaiser Family
Foundation, 2014.
11. Clemens J and Gottlieb JD. Bargaining in the Shadow of a Giant: Medicare’s Influence
on Private Payment Systems. Working Paper No. 19503. Cambridge, MA: National Bureau of
Economic Research, 2013.; White C, Contrary To Cost-Shift Theory, Lower Medicare Hospital
Payment Rates for Inpatient Care Lead to Lower Private Payment Rates. Health Affairs.
2013;32(5):935–943; White C and Wu VY. How Do Hospitals Cope with Sustained Slow
Growth in Medicare Prices? Health Services Research. 2014;49(1):11–31.
12. Holahan J, Blumberg LJ, and Wengle E. Marketplace Premium Changes throughout the
United States, 2014-2015. Washington: Urban Institute, 2015
13. Chandra A, Holmes J, and Skinner J. Is This Time Different? The Slowdown in
Healthcare Spending. Working Paper No. 19700. Cambridge, MA: National Bureau of
Economic Research, 2013; Cutler D and Sahni NR. If Slow Rate of Health Care Spending
Growth Persists, Projections May Be Off by $770 Billion. Health Affairs. 2013;32(5):841–850;
Ryu AJ, Gibson TB, McKellar MR, and Chernew ME. The Slowdown in Health Care Spending
in 2009-11 Reflected Factors Other Than the Weak Economy and Thus May Persist. Health
Affairs. 2013;32(5): 835–840; Holahan J and McMorrow S. What Drove the Recent Slowdown
in Health Spending Growth and Can It Continue? Washington: Urban Institute, 2013.
14. Dranove D, Garthwaite C, and Ody C. Health Spending Slowdown Is Mostly Due
to Economic Factors, not Structural Change in the Health Care Sector. Health Affairs.
2014;33(8):1399–1406; Kaiser Family Foundation. Assessing the Effects of the Economy on
the Recent Slowdown in Health Spending. Menlo Park, CA: Kaiser Family Foundation, 2013.
http://kff.org/health-costs/issue-brief/assessing-the-effects-of-the-economy-on-the-recent-
slowdown-in-health-spending-2/. Accessed May 26, 2016.
15. Roehrig C, Turner A, Hughes-Cromwick P, and Miller G. Health Sector Trend Report:
March 2015- Expanded Report Covering All of 2014. Washington: Altarum Institute, 2015.
http://altarum.org/sites/default/files/uploaded-publication-files/ltarumpercent20RWJFpercent-
20Trendpercent20Reportpercent20Marchpercent202015percent20FINAL_0_0.pdf. Accessed
May 26, 2016.
16. Holahan J and McMorrow S. Has Faster Health Care Spending Growth Returned?
Washington: Urban Institute, 2015. http://www.urban.org/research/publication/has-faster-
health-care-spending-growth-returned. Accessed May 26, 2016; Larner L. Health Affairs
Web First: National Health Spending Growth Accelerates in 2014. Health Affairs. December
2, 2015 http://healthaffairs.org/blog/2015/12/02/health-affairs-web-first-national-health-
spending-growth-accelerates-in-2014/. Accessed May 26, 2016; Martin AB, Hartman M,
Benson J, Catlin A, and the National Health Expenditure Accounts Team. National Health
Spending in 2014: Faster Growth Driven by Coverage Expansion and Prescription Drug
Spending. Health Affairs. 2015;35(1):150-160.
17. Roehrig C, Turner A, Hughes-Cromwick P, Miller G, and Rhyan C. Health Sector Trend
Report: March 2016- Expanded Report Covering Fourth Quarter of 2015. Washington:
Altarum Institute, 2016. http://altarum.org/sites/default/files/uploaded-publication-files/Alta-
rum%20RWJF%20Trend%20Report%20March%202016_1.pdf. Accessed May 26, 2016.
13
ACA Implemention-Monitoring and Tracking
Copyright© June 2016. The Urban Institute. Permission is granted for reproduction of this file, with attribution to the
Urban Institute.
About the Authors and Acknowledgements
Stacey McMorrow is a senior research associate and John Holahan is an Institute Fellow with the Urban Institute’s
Health Policy Center. The authors are grateful to Bowen Garrett and Stephen Zuckerman for their comments and
suggestions as well as to Patricia Solleveld and Erik Wengle for research assistance.
About the Robert Wood Johnson Foundation
For more than 40 years the Robert Wood Johnson Foundation has worked to improve health and health care. We
are working with others to build a national Culture of Health enabling everyone in America to live longer, healthier
lives. For more information, visit www.rwjf.org. Follow the Foundation on Twitter at www.rwjf.org/twitter or on
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About the Urban Institute
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economic and governance problems facing the nation. For more informaiton, visit www.urban.org. Follow the Urban
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Urban Institute’s Health Policy Center, its staff, and its recent research can be found at www.healthpolicycenter.org.