Affordable Care Act is Working to Bring Down Health Care Costs

By Kathleen Sebelius, Secretary of Health and Human Services
Posted March 12, 2013

Before the Affordable Care Act passed, the dramatic rise in health care costs put access to health care coverage out of reach for many Americans. With many people no longer able to afford coverage, the cost of uncompensated care in hospitals rose and those costs were passed along to people that could afford coverage. And, at the same time, health care’s share of the nation’s economy was growing rapidly.

Three years later, the Affordable Care Act is working to bring down health care costs.

The law includes innovative tools to drive down health care costs.  It incentivizes efficient care, supports a robust health information technology infrastructure, and fights fraud and waste.  After decades of growing faster than the economy, last year, Medicare costs grew by only four-tenths of a percent per person, continuing the trend of historically low Medicare growth seen in 2011 and 2010.

Major progress in Medicare is sparking smarter care in the private market, and it’s working to bring down costs in the private market. Overall health-care costs grew more slowly than the rest of the economy in 2011 for the first time in more than a decade. And just last week, USA Today Site exit disclaimer reported health care providers and analysts found that “cost-saving measures under the health care law appear to be keeping medical prices flat.”

Even though the health care law is working to bring down costs, critics continue to claim the law is too expensive.  In reality, the law is fully paid for, and according to the independent Congressional Budget Office, the law reduces the deficit over the long term.  The facts show that employers, patients and our federal budget can’t afford to roll back the law now:

  • Fully repealing the Affordable Care Act would increase the deficit by $100 billion over ten years and more than a trillion dollars in the next decade.  It would also shorten the life of the Medicare Trust Fund by eight years.
  • Health care spending grew by 3.9% in 2011, continuing for the third consecutive year the slowest growth rate in fifty years.
  • Health-care costs grew slower than the rest of the economy in 2011 for the first time in more than a decade.
  • The proportion of requests for double-digit premium increases plummeted from 75% in 2010 to 14% so far in 2013.
  • Medicaid spending per beneficiary decreased by 1.9% from 2011 to 2012.
  • Medicare spending per beneficiary grew by only 0.4% in fiscal year 2012.
  • Slower growth is projected to reduce Medicare and Medicaid expenditures by 15% or $200 billion by 2020 compared to what those programs would have spent without this slowdown, according to CBO.

At the same time the law is driving down cost growth, the Affordable Care Act is strengthening coverage and expanding coverage.  Thanks to the law, more than 34 million people with Medicare received a no-cost preventive service.  And, over six million Medicare beneficiaries received $5.7 billion in prescription drug discounts. 

Some have proposed turning Medicare into a voucher program--undercutting the guaranteed benefits that seniors have earned and forcing them to pay thousands more out of their own pockets.  If we turn Medicare into a voucher program, our system doesn’t have any incentives to be more efficient and lower costs.  Instead, as costs rise, vouchers will leave seniors to pay more and more out of their own pocket.  

The health care law is working to lower costs, increase efficiency, and deliver better patient outcomes – without cutting costs at seniors’ expense.  In recent years, we have seen dramatic slowing of the growth of federal health care programs.  The best approach to reducing our deficit is to continue implementing common-sense reforms.  The health care law is putting us on the right path to make Medicare and Medicaid stronger, more efficient and less costly.