Ask The Advisor: December 2014

Ask The Advisor: December 2014

Have Healthcare Costs Really Slowed Down Due to Obamacare?

Q: We've read that healthcare costs have slowed down and that Obamacare is responsible. Is there any data to confirm this? My husband and I have Medicare, but we haven't noticed any slow down. Our Medicare Advantage plan's out-of-pocket costs, particularly for prescriptions, will be increasing next year. Recently I had hip replacement surgery and I was surprised at how much we had to pay out-of-pocket.

A: The claim is based on federal government healthcare spending data, much of which comes under the Department of Health and Human Services. The data indicates that for several years there's been a marked reduction in the rate of government spending on healthcare costs. In other words, spending is still growing, but at a slower rate than before. Obamacare is getting much of the credit for the reduction, but it's still too early to tell whether the new health law has been effective in reducing healthcare costs for consumers. In addition, actuaries for the Centers of Medicare and Medicaid Services project that the slow down in healthcare inflation is ending and that Medicare spending growth will average 7.3 percent per year by 2016.

A new analysis by Avalere Health indicates a growing number of Medicare Advantage plans are shifting costs to patients through higher deductibles and out-of-pocket costs. The analysis also indicated that new payment pressures from reductions mandated by the new healthcare law “is likely to have a significant impact on plan participation and plan design.”

For Medicare beneficiaries to get the lowest costs from their plans it's more important than ever to use doctors, hospitals, labs, clinics and pharmacies who are preferred providers in your Medicare Advantage plan network next year. Plans nationwide are moving to narrower provider networks and the doctor or pharmacy you used in 2014 may no longer participate in your health plan next year. Check your health plan's website online, or call the customer service number in the materials you received from your plan this fall.

Sources: "National Health Expenditure Projections, 2013-23: Faster Growth Expected," Health Affairs, September 4, 2014. "Medicare Advantage, Drug Plan Offerings Remain Robust, But Face 2015 Challenges," Rebecca Adams, CQ HealthBeat, September 19, 2014.