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GAO: PPACA could help budget, or hurt a little

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If Congress can keep the cost-containment provisions in the Patient Protection and Affordable Care Act of 2010 (PPACA) in place, PPACA might slow growth in government debt a bit.

If Congress keeps the coverage expansion provisions in place but phases out the major cost-containment provisions, the budget outlook might be a little worse than if Congress had left the U.S. health care system alone and continued with its historical approach to health program budgeting.

The big question whether Congress can keep either pre-PPACA or PPACA cost-containment rules in place, not so much the effects of the PPACA coverage expansion programs.

Susan Irving and James Cosgrove, directors at the U.S. Government Accountability Office (GAO), have published those conclusions in a review of the possible effects of PPACA on the long-term fiscal outlook of the U.S. government.

The GAO prepared the review for Sen. Jeff Sessions, R-Ala., a member of the Senate Budget Committee.

GAO analysts looked at four different sets of projections that show how public debt might grow as a percentage of the U.S. gross domestic product (GDP) between 2010 and 2060.

The country already health program cost-containment provisions, such as mandated “productivity related” cuts in Medicare physician reimbursement rates, in place before Congress enacted PPACA.

When Congress enacted PPACA, lawmakers kept the physician reimbursement cut provisions and added an Independent Payment Advisory Board (IPAB) that’s supposed to make mandatory recommendations for holding down Medicare cost growth.

Another PPACA provision caps the health insurance purchase subsidies that are supposed to go to consumers who use the new PPACA health insurance exchange system.

After 2018, PPACA will cap the insurance purchase subsidies at 0.504 percent of GDP.

“As a result, the share of health insurance premiums paid by enrollees is scheduled to increase in years when spending exceeds this limit,” the GAO analysts wrote.

In the real world, the analysts reported, Congress was having a hard time keeping cost-containment controls in place before PPACA was signed, and it’s not clear whether Congress will be able to resist pressure to keep PPACA controls in place in the future, the analysts said.

If, for example, Congress can keep the PPACA controls in place, and it also could have kept the pre-PPACA controls in place, then public debt might reach 200 percent of GDP a few years after 2050, rather than a few years before 2050, the analysts said.

If Congress will let historical cost increase trends continue under PPACA rules, and it would have let the same trends continue under the pre-PPACA rules, then debt likely will reach 200 percent of GDP around 2030 either way, the analysts said.

“While the steps taken in PPACA to restrain spending on the federal health programs were significant, they were not sufficient to prevent an unsustainable increase in debt held by the public even under the more optimistic assumptions in our baseline extended simulation,” the analysts said. 

The simulations depend on broad sets of assumptions about trends that are inherently uncertain, and there are many factors other than the underlying cost of health care that could affect health care spending, the analysts said.

Because of the aging of the population and other trends, the government would probably have to spend a higher percentage of national income on health programs even if excess growth in the cost of care ended, the analysts said.

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