Skip to content

Obama Administration Officials Again Confirm that Obamacare Will Increase Health Care Spending

June 12, 2012

Today’s release of a report by the Centers for Medicare and Medicaid Services (CMS) detailing national health care expenditures confirms that, despite the Obama Administration’s promises to the contrary, health care costs continue to increase.


“We agree on reforms that will finally reduce the costs of health care.  Families will save on their premiums; businesses that will see their costs rise if we do nothing will save money now and in the future… You talk to every health care economist out there and they will tell you that whatever ideas are — whatever ideas exist in terms of bending the cost curve and starting to reduce costs for families, businesses, and government, those elements are in this bill.” – President Obama, December 15, 2009

Today, the Obama Administration’s own actuaries reaffirmed a reality that so many other reports have already warned about – because of the Democrats’ health care law, health care spending will go up, employers will drop health coverage, and the government will control a greater portion of our health care system.  The report’s facts are clear:

The Democrats’ Health Care Law Will Increase Private Health Insurance Premiums

  • Despite assurances otherwise, private health insurance premiums are projected to increase by 6.8 percent annually between 2014 and 2021, a premium spike of over 44 percent from before the major Obamacare mandates go into effect.  (p. 10)
  • Similarly, out of pocket expenditures are increasing by 5.1 percent over the same time period. (p. 10)

Employers Will Drop Coverage for Their Employees

  • From 2015 to 2021, “private health insurance spending is projected to grow an average of 5.9 percent per year from 2015 through 2021,” constrained from rising even faster because “large employers with low-wage employees are expected to discontinue health insurance benefits.” (p. 5)  
  • During this period, employer spending on health care will increase at more than double (5.3 percent) (p. 10) the rate of projected productivity increases (2 percent), forcing companies to choose between decreasing wages, dropping health coverage or hiring fewer workers.  
  • For the second year in a row since the Democrats’ health care overhaul was signed into law, there were “decreases in the number of people with private health insurance.” (p. 9)  
  • Once the Democrats’ health care law ramps up (2015-2021), this trend will continue with the  “likelihood that some employers of low-wage workers will stop offering health insurance.” (p. 9)

Democrats’ Prescription for Rising Health Care Costs:  Spend More Money!

  • Obamacare will add one half trillion dollars in new health spending. (p. 1)
  • After years of annual health spending growth just under 4 percent, spending growth is expected to skyrocket, because of Obamacare, to 7.4 percent in 2014, which is 2.1 percent higher than without Obamacare.  (p. 4)
  • National health spending will increase 6.2 percent by 2021, from $2.59 trillion in 2010 to $4.78 trillion in 2021. (pp. 2-3)
  • The national health expenditure growth rate is expected to skyrocket under the Democrats’ health care law in 2014, from 3.9 percent in 2011 to 7.4 percent in 2014, driven by an 18 percent increase in Medicaid spending. (p. 4)
  • Despite claims that the law would slow the rate of health care spending, national health expenditures are still growing faster than GDP and will grow from 17.6 percent of GDP in 2009 to 19.6 percent in 2021. (p. 2)
  •  When the massive entitlement expansion begins in 2014, growth will soar across all sectors of health care providers (p. 10):   
    • Hospital growth will increase from 4.2 percent to 6.7 percent,
    • Physicians and clinical services will grow from 2.5 percent to 8.5 percent, and
    • Prescription drug growth will jump from 3.1 percent to 8.8 percent.
  • As government health care spending explodes, household health care spending is also expected to increase at an average annual growth rate of 6.3 percent from 2015 to 2021, after having been at 3.8 percent from 2011-2013.  Households pay more; government spends and controls more; taxpayers lose.

Government Takeover of Health Care Becomes More of a Reality

  • By 2021, for the first time in history, government spending is expected to account for half of all health care spending in the United States thanks to Obamacare.
  • “By 2021, federal, state, and local government health care spending is projected to be nearly 50 percent of national health expenditures, up from 46 percent in 2011, with federal spending accounting for about two-thirds of the total government share.” (p. 1)

Special Deals Strike Again

  • Having agreed to finance a reported $120 billion portion of the spending in the Democrats’ health care law (not to mention hundreds of millions of dollars in advertisements on the Obama Administration’s request and behalf), the pharmaceutical industry chose to drastically increase their prices.  Specifically, price growth increased by 3.9 percent in 2011, up from just 1.2 percent in 2010. (p. 3).

A Few More Interesting Tidbits

  • Of those individuals getting health insurance in Obamacare’s government-run exchanges, only 25 percent were previously uninsured. (p. 9)
  • Health care spending growth in recent years has slowed somewhat due to the failed economic policies of the Obama Administration.  If people have less money in their pocket, they are less likely to receive care.  “First, consumers are expected to remain sensitive to rising health costs, particularly given continued low projected income growth.” (p. 4)
  • The report also predicts that the health care law may reduce national health expenditures by 0.1 percent from 2015-2021.  Those reduced expenditures are the result of Medicare cuts which the Medicare actuaries warn could jeopardize seniors’ access to care and to a new tax on those with what the government defines as “generous” health insurance coverage.
  • This Obamacare tax will lead “enrollees to shift from more generous plans to lower-cost plans that may have tighter utilization management, narrower networks, or higher cost-sharing requirements.” (p. 5)