#ObamaCare Will Not Cut Healthcare Costs

From Thomas Miller and Abby McCloskey, at WSJ, "The Next ObamaCare Mirage":

Supporters of President Obama are working overtime to backtrack from his promise that "If you like your health-care insurance, you can keep it. Period." While the president has conceded that this statement was inaccurate, the administration doesn't seem to have learned its lesson. The damage control plan is to spread another falsehood about the Affordable Care Act.

The claim this time is that the health-care "cost curve is bending, and the ACA is a significant part of the reason." That was what David Cutler —an influential Harvard economist and senior health-care adviser in Mr. Obama's 2008 presidential campaign—wrote in a Washington Post WPO -0.71%  op-ed on Nov. 10.

The president jumped on this theme in his press conference on Nov. 14. "I'm not going to walk away from something that has helped the cost of health care grow at its slowest rate in 50 years," he said. On Wednesday, the White House Council of Economic Advisers published a report claiming that "the ACA is contributing to the recent slow growth in health care prices and spending."

These assertions border on nonsense....

In his 2008 campaign, Mr. Obama promised that his health-care reform plan would save a typical family $2,500 in annual premiums by the end of his first term. This was Mr. Cutler's prediction, and it was based on projected rapid returns from larger federal investments in health-information technology, new reinsurance subsidies for high-cost workers, and savings on administrative costs for health insurance.

Those cost savings haven't materialized. Mr. Cutler maintains they will, mostly through other untested reforms, and the White House Council of Economic Advisers report points to potential savings from fledgling Accountable Care Organizations, lower Medicare reimbursements, value-based payments and hospital readmission penalties. To be sure, some of these programs have and may result in small savings, but they had little effect on savings claimed from 2010 to 2013. For example, even the president's Council of Economic Advisers hedges that some of the claimed savings from reduced hospital readmission rates "may not be entirely attributable to the ACA payment incentives."

CMS actuaries find that any positive effects of the ObamaCare delivery system experiments on the cost of health care "remain highly speculative." When they compare their September 2013 projections with earlier estimates in April 2010, these actuaries find that the law would increase national health spending higher than previously expected by an additional $27 billion in 2019 alone.

To argue that the Affordable Care Act has been and will be a key driver of slower health-care spending is irreconcilable with the most basic facts about such spending over the last decade, as well as with the judgment of the executive branch's own team of actuaries responsible for health-care accounting and future projections.

Magical communist gnomes were supposed to make this work, or something.