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2014

Nationally, a New York Times analysis concluded

and 34. Thus far, data suggests the
young are signing up at about half that that, for some of those who do not qualify for

rate. The ratio is important because
the ACA’s basic function is to force the subsidies, premiums under the ACA may take

healthy to pay higher premiums so the
sick can pay less. Without healthy en- as much as 20 percent of income—twice the

rollees, the exchanges will lose money,
accepted 10 percent definition of “affordable.”
and either the government picks up
the tab or premiums have to increase.

When premiums go up, the healthy
will have less incentive to buy insur-

ance, and the so-called “death spiral” Reducing the Growth The actuaries also explained why

could begin: higher premiums leading of Medical Costs
they were lowering their estimate,
to fewer enrollees leading to higher here, the ACA’s supporters would like however, and their explanation wasn’t

premiums, and so on.
to claim victory, and there is no denying the new health-care law. Instead, by
In the months ahead, more grandfa- that the growth of health-care expen- 2022, “the ACA is projected to... add

thered policies will expire, and employ- ditures has slowed since 2010 when the approximately 0.1 percentage-point to
ers will continue to react to the ACA’s ACA was passed. Nevertheless, growth average annual health spending growth

mandates. Many will reduce employee was already slowing—in large part be- over the full projection period, and

hours or push employees onto the cause of the great Recession.
increase cumulative health spending by
exchanges by canceling group plans. In between 2009 and 2013, actuaries at roughly $621 billion”—or about $200

the end, though, what Americans want the Centers for Medicare and Medic- per American per year.
is not an insurance card but honest-to- aid Services lowered their forecast of A 2013 paper by the National bureau

god health care. getting people who medical spending for 2016 by 1 percent of Economic Research (NbER) was

don’t have health insurance to sign up of gdP, which translates to $2,500 for likewise pessimistic, linking the recent
for it should have been the easy part. a family of four. That’s pretty huge, cost slowdown to three factors:

unfortunately, the more successful
and ACA designers such as former se-
the ACA is at that, the more difficult nior health-care adviser david Cutler • Rapid diffusion of high-deduct-

its other goal of cutting health-care have used the estimate to call the act
ible health-care plans that

expenditures becomes.
a success.
caused households to scale back
physician visits, especially as

the economic slowdown created
financial distress.

• Cuts in Medicaid benefits and In Knox County, Jason Garner, who works

reimbursement rates necessitated
as a liaison between East Tennessee
by shrinking state budgets.

schools and Rush’s Musical Services, was
• Most importantly, a temporary
slowdown in new technology cou-
blindsided when the State of Tennessee
pled with the expiration of exist-

ing super-drug patents, allowing
the substitution of generics.
dropped its share of his premiums in

As the global economy picks up and anticipation of different ACA changes

companies again invest in research and
affecting small businesses.
development, the NbER believes these
effects will fade, leading to a long-term

1.5 percent growth of medical spending
in excess of gdP growth.

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